TKM Global Logistics Limited Vs Commissioner of Service Tax (CESTAT Kolkata)
Service tax demand on service received from abroad before 18.4.2006 not sustainable and it is essential for the Show Cause Notice issuing authority to clearly indicate the sub-clause under which the service tax in question would fall.
TKM Global Logistics Limited filed an appeal challenging an Order-in-Original issued by the Commissioner of Service Tax, Kolkata, which confirmed a demand for service tax along with interest and penalties amounting to Rs. 22,25,87,789/-. The dispute arose from the nature of services rendered by TKM Global Logistics Limited in relation to the import of goods from abroad, particularly focusing on the services provided by Overseas Logistics Service Providers (OLSPs) with whom TKM had contracts.
TKM’s scope of services covered various activities including obtaining goods from foreign suppliers, handling cargo, negotiating freight, and transporting goods to the factory in India. They entered into contracts with OLSPs for services abroad since TKM had no physical presence overseas. The invoices raised by TKM to its clients comprised taxable and non-taxable components, with the former reflecting services provided by TKM in India and the latter reflecting charges by OLSPs.
The dispute centered around whether the services provided by OLSPs were taxable under the category of “Business Auxiliary Service” under relevant sections of the Finance Act, 1994. The Commissioner contended that these services fell under this category, leading to the demand for service tax. However, TKM argued against this classification, asserting that the OLSPs were not acting as their agents and therefore did not qualify under the relevant clauses.
