Case Law Details
CMA CGM Agencies (India) Private Limited Vs Commissioner of Service Tax (CESTAT Kolkata)
CESTAT find that with regard to documentation charges, the demand has been raised for the period October, 2002 to April, 2006 by issuance of show-cause notice dated 22.04.2008 by invoking extended period of limitation. As the assessee was showing their transactions of documentation charges in their ST-3 Returns regularly, which is evident from the show-cause notice itself. In that circumstances, the demand of service tax on documentation charges from the period October, 2002 to April, 2006 is barred by limitation.
Further, the demand has been raised under the category of “Steamer Agent Services”, in fact, it is “Business Support Services”, which came into effect from 01.05.2006, therefore, at the best, the said service can be considered as “Business Support Service”. Therefore, the documentation services are not liable to tax prior to 1st May, 2006. We, therefore, hold that the documentation services are not taxable during the impugned period. Accordingly, the appeal filed by the assesse is allowed.
FULL TEXT OF THE CESTAT KOLKATA ORDER
Both sides are in appeal against the impugned order dated 30.01.2009 passed by the Ld.Commissioner of Service Tax, Kolkata.
2.1 The facts of the cases are that the assessee is engaged in providing Steamer Agent Services on behalf of a ingapore based shipping line, CMA CGM Agencies (India) Pvt. Ltd. formerly known as APL Company Pvt. Ltd.. The appellant entered into a contract on 1st April, 1998 with their Principal. A Show-cause notice has been issued to the appellant proposing levy of service tax on terminal handling charges, demurrage charges, wharfage charges and documentation charges under the category of “Steamer Agent Services”.
2.2 The assessee contested the matter before the adjudicating authority, who dropped the demand against the assessee on account to terminal handling charges to the tune of Rs.1,94,78,111/- and demurrage charges to the tune of Rs.1,30,67,154/- and wharfagecharges to the tune of Rs.4,62,217/- but on documentation charges to the tune of Rs.12,43,163/-, the demand of service tax was confirmed against the assessee for the period October, 2002 to April, 2006.
2.3 Being aggrieved from the said order, the assessee is before us against charging of service tax under the category of “Steamer Agent Services” for documentation charges for the period October, 2002 to April, 2006 and the Revenue is in appeal against the impugned order for dropping the demand against the assessee on account of terminal handling charges and demurrage charges and wharfage charges for the period from October, 2002 to September, 2007 under the category of “Steamer Agent Services”.
3.1 Shri Prasad Paranjape, Ld. Counsel for the assessee has appeared before us and stated that whole of the demand proposing show-cause notice against the assessee is under the category of “Steamer Agent Services”. In fact, whatever amount has been received/collected by the appellant from their Principal, the assessee has paid the service tax thereon. He submits that the documentation charges, on which the demand has been confirmed under the “Steamer Agent Services” are duly qualified under the “Business Support Services” w.e.f. 01.05.2006 and the assessee paid the service tax under the category of “Business Support Services” on documentation charges from 01.05.2006. He further submits that for the period from October, 2002 to April, 2006, the demand on account of documentation charges is also highly time barred as Show-cause notice has been issued to the appellant on 22.04.2008 by invoking extended period of limitation.
3.2 In regard to the appeal filed by the Revenue, it is his submission that the show-cause notice has been issued for demand of service tax under the category of “Steamer Agent Services” and these are terminal handling charges and demurrage charges collected by the assessee from the importers or exporters, which has been remitted to their Principal to whom the appellant provided “Steamer Agent Services”, therefore, the assessee is not liable to pay service tax thereon. The Ld. Commissioner (Adjudication) has considered the same in his impugned order and given his findings thereon.
3.3 In support of his arguments, he relied on the Circular F.No.B43/1/97/TRU dated 06.06.1997 and Circular No.121/2/2010-S.T. dated 26.04.2010. He also relied on the decision of their own cases reported as 2015 (37) STR 301 (Tri. Bom.) and 2016 (41) STR 292 (Tri.-Bom.).
4.1 On the other hand, the Ld. Authorised Representative for the Revenue, strongly opposes the contentions of the Ld. Counsel for the assessee and submits that the Ld. Commissioner has committed an error while passing the impugned order considering the facts that the amount, which has been remitted to their Principal therefore, they are not liable to pay service tax. He further submits that the assessee has provided the said services, which are taxable services, on which they have not paid the service tax, therefore, they are liable to pay service tax.
4.2 With regard to documentation charges, it is contention of the appellant assessee that they themselves have agreed that these are “Business Support Services”, which are taxable services, therefore, they are not liable to pay service tax for the period October, 2002 to April, 2006.
5. Heard the parties and considered the submissions.
6. On careful consideration of the submissions, we find that with regard to documentation charges, the demand has been raised for the period October, 2002 to April, 2006 by issuance of show-cause notice dated 22.04.2008 by invoking extended period of limitation. As the assessee was showing their transactions of documentation charges in their ST-3 Returns regularly, which is evident from the show-cause notice itself. In that circumstances, the demand of service tax on documentation charges from the period October, 2002 to April, 2006 is barred by limitation.
7. Further, we also find that the demand has been raised under the category of “Steamer Agent Services”, in fact, it is “Business Support Services”, which came into effect from 01.05.2006, therefore, at the best, the said service can be considered as “Business Support Service”. Therefore, the documentation services are not liable to tax prior to 1st May, 2006. We, therefore, hold that the documentation services are not taxable during the impugned period. Accordingly, the appeal filed by the assesse is allowed.
8.1 With regard to the appeal filed by the Revenue, we find that the Ld. Commissioner in his order has observed as under :
“Further it is found that in this case the said assesee collected terminal handling charges along with ocean freight and other charges from the exporters/importers but they did not keep the said charges with them while remitting ocean freight and other charges to M/s APL Co. PTE LTD, Singapore. Thus it cannot be said that the said assesse received terminal handling charge from M/s APL CO PTE LTD. In the result, Service Tax cannot be levied on terminal handling charge collected by the said assesse under the category of “Steamer Agent Services”. Hence, demand of service tax Rs.1,92,16,247/- and Education Cess Rs.2,62,864/- is not sustainable.”
8.2 Further, he has observed as under :
“…………………….In this case the said assesse did not provide any service in relation to detention of containers or storage at terminal to M/s APL CO.PTE LTD. It is noted that in the SCN, no case has been made out for invoking Section 65A(2)(b) and Classification of demurrage under the service of Steamer Agent.
Here the said assesse collected demurrage on behalf of the shipping line. However, they did not deduct demurrage from the remittance to M/s APL CO.PTE LTD. Thus, demurrage is not received by the said assesse as the value of any taxable service from M/s APL CO PTE LTD.
In view of the above, it is to be held that demurrage collected by the said assesse is not taxable under the category of “Steamer Agent Services”. Thus, demand of service tax of Rs.1,28,16,662/-, Education Cess of Rs.2,29,608/- and Higher Education Cess of Rs.20,884/- is not maintainable.”
8.3 We have also examined the definition of Steamer Agents taxable service, which is as under :
“Section 65 (105) “ taxable service” means any service provided
(a) ………………………………………..
(b) ……………………………………………
(c) ……………………………………………
(d) …………………………………………….
(e) ………………………………………………
(f) ……………………………………………….
(g) ………………………………………………
(h) ………………………………………………….
(i) to a shipping line, by a steamer agent in relation to a ship’s husbandry or dispatch or any administrative work related thereto as well as the booking, advertising or canvassing of cargo, including container feeder services.
Section 65 (104c)
(100) “ steamer agent” means any person who undertakes, either directly or indirectly, –
(i) to perform any service in connection with the ship’s husbandry or dispatch including the rendering of administrative work related thereto ; or
(ii) to book, advertise or canvass of cargo for or on behalf of a shipping line ; or
(iii) to provide container feeder services for or on behalf of a shipping line ;”
As the definition incorporated hereinabove, “Steamer Agents Service” is the service provided by the assessee to the Shipping Line, who is the steamer owner and of that any amount received as commission by the appellant-assessee from their Principal, they have paid the service tax. There is no dispute with regard to the said payment.
8.4 Further, the amount on which the Revenue sought to levy service tax from the assessee, are received by the assessee from the exporters/importers, which have been directly remitted to their Principal i.e. Shipping Line.
8.5 The said issue has been examined by this Tribunal in the assesee’s own case and observed as under :
“4.2 The short question for consideration is whether the ocean freight, currency adjustment charges, bunkering charges, advance manifest charges collected by the appellant on behalf of the shipping lines can be subjected to levy of Service Tax. It is undisputed that most of these charges form part of the transaction value in respect of customs matters and therefore, the question of levy of Service Tax on a customs transaction would not arise at all. If the appellants have collected these charges and remitted the same to the shipping lines, the whole amount received and transmitted cannot be said to be a consideration for the services rendered. What can be levied to Service Tax is the service rendered by the appellant either as a steamer agent or BAS in respect of collection of freight and other charges and only on the consideration received for the services rendered, Service Tax can be levied. In this view of the matter, the impugned order is clearly not sustainable in law and the matter has to go back to the adjudicating authority for de novo consideration. The appellant is also directed to co-operate with the department and submit all the requisite particulars, such as, the amount of ocean freight and other charges collected by them and the amount transmitted by them to the foreign shipping lines and the amount of consideration received/retained by them in respect of the services rendered and whether Service Tax liability has been discharged on the consideration received by them for rendering of the services. On submission of such information, the adjudicating authority shall examine the matter afresh and pass a speaking order after giving due opportunity of hearing to the appellant. Thus, the appeal is allowed by way of remand. Stay petition is also disposed of.“
8.6 Further, in the case of United Liner Agencies of India (P) Ltd. Vs. Commissioner of GST & Central Excise, coimbatore reported in 2019 (25) GSTL 446 (Tri.-Mad.), this Tribunal has observed as under :
“4. It is seen that appellants have been acting an agent of M/s. Kawasaki Liner Services. Both the authorities have stated that appellant provided port handling and terminal handling services to their customers. Appellant as an agent of M/s. Kawasaki Liner Services collected port handling charges and terminal handling charges from their customers and remitted the same to their principal. However, they have not collected any mark up or retained any part of the charges collected from their customers. They have just passed on the same to their principals. While collecting the port handling charges or terminal handling charges, appellants have not rendered any such service under this category. It is in fact Kawasaki Liner Service who have rendered these services. The appellants having not provided any service of port handling or terminal handling service and having not collected any consideration in this regard, we are of the considered view that the demand of service tax under this category on the appellants cannot sustain.“
8.7 Further, we find that “Steamer Agents Service” has been clarified by the CBEC’s Circular dated 06.06.1997, which are as under :
“Steamer Agents
3.1 The expression ‘Steamer Agents’ has been defined to mean any person who undertakes, either directly or indirectly.
1. to perform any service in connection with the ships’ husbandry or dispatch including the rendering of administrative work related thereto; or
2. to book, advertise or canvass for cargo for or on behalf of a shipping line; or
3. to provide container feeder services for or on behalf of a shipping line;
3.2 The taxable service provided by a steamer agent to a shipping line, is the service provided by a Steamer Agent in relation to a ships’ husbandry or dispatch or any administrative work related thereto as well as the booking, advertising or canvassing of cargo, including container feeder services. The value or the taxable service in relation to service provided by a steamer agent to a shipping line, shall be the gross amount charged by such agent from the shipping line for services in relation to a ship’s husbandry or dispatch or any administrative work related thereto or in relation to the booking, advertising or canvassing of cargo, container feeder services including the commission paid to such agent.
3.3 Steamer Agents incur various types of expenses on behalf of the shipping line such as pilotage and berth hire charges, Indian Coast light dues paid to the port authorities, cargo expenses paid to port authorities and transporters such as CONCOR/ railways, private transporters, chartered accountants fee, income tax, brokerage paid on export cargo, ship handling expenses paid to stevedoring agents. For all the above charges the Steamer Agent is ordinarily reimbursed by the shipping line. Further, the Steamer Agent bill the principals i.e. the shipping line, for two types of service charges. One is called the husbandry fee which they charge for a ships’ husbandry. The second is the agency commission which is paid by the shipping line on the import and export cargo. These commissions are usually paid as a percentage or the net ocean freight (basic freight) which is clearly indicated in the agreement entered into between the Steamer Agent and shipping line.
3.4 It is clarified that in relation to the Steamer Agent, the service charges will constitute the husbandry fee as well as the agency commission on import/export cargo. Other expenses incurred by the Steamer Agent on behalf of the shipping line shall not be taken into account.”
8.8 As it is the facts on record that whatever amount has collected by the appellant from the importers/exporters on account of terminal handling charges, demurrage charges, has been remitted directly to the Principal i.e. Shipping Line and whatever amount they have received from the Principal i.e. Shipping Line, they paid the service tax thereon.
9. In that circumstances, we do not find any merit in the Revenue’s appeal. We further take note of the fact that the show-cause notice has been issued by invoking extended period of limitation. In that circumstances also, part of the demand is barred by limitation.
10. In conclusion, we hold that the appeal filed by the assessee is allowed and the appeal filed by the Revenue is dismissed.
