Seamax Shipping India Pvt. Ltd. Vs Commissioner of GST & Central Excise (CESTAT Chennai)
Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai Bench, has ruled that reimbursements received by service providers acting as a “pure agent” are not subject to service tax. This decision came in the case of Seamax Shipping India Pvt. Ltd. Vs Commissioner of GST & Central Excise, overturning a previous order that had confirmed a significant service tax demand.
Seamax Shipping India Pvt. Ltd., engaged in clearing and forwarding agency services, faced a service tax demand of Rs. 96,62,307 for the period 2007-08 to 2010-11. The demand stemmed from the Revenue’s contention that certain incomes, including reimbursements for transport and weighment charges, brokerage income, and drawback commission, should have been included in the value of their taxable services. The original adjudication had confirmed a service tax liability of Rs. 83,70,488 under various service categories.
Seamax Shipping argued that the confirmed demand largely pertained to reimbursements received as a pure agent, where they merely paid expenses on behalf of their clients and were subsequently reimbursed without an added margin. They also contended that the brokerage income was effectively a reduction in freight charges from shipping lines, not a service provided. The company emphasized that the amounts were simply passed through and not part of their service value.
