Case Law Details
Nilja Shipping Pvt. Ltd. Vs Commissioner of Central Excise (CESTAT Chennai)
The facts of the case are that appellants are engaged in the business as freight forwarders and provide worldwide containerised and conventional cargo transportation and logistics services. During audit of accounts, it was noticed that besides collecting various charges, such as documentation charges, examination charges, freight charges, appellants also collected amount towards purchasing of cargo space from shipping lines. Department was of the view that said activity falls under ‘Business Support Service’ and therefore subject to levy of service tax. Show cause notice was issued for different periods proposing to demand short paid service tax along with interest under BSS and also proposing to impose penalty. After due process of law, the original authority confirmed demand, interest and imposed penalty. Aggrieved, appellant is now applied before the Tribunal.
ITAT have heard the submissions made by both sides and also perused the records.
It is brought out from the facts explained by both sides that activity is nothing but purchase and sale of cargo space. The amount received for such activity is a profit earned for purchase and sale of the cargo space. The Tribunal in the case of Surya Shipping (supra) has analyzed the very same issue and observed that mere sale and purchase of cargo space and earning profit in the process is not a taxable activity.
The Tribunal has held that sale and purchase of cargo space is not service. If it is not a service then there is no question of considering it as an input service so as to include the charges in the taxable income. The amount received is nothing but profit from sale. In various cases, the department has demanded service tax under the category of BAS. In the case of Surya Shipping (supra) the demand was made under BSS. In the present case also the demand is under BSS. In Surya Shipping the Tribunal held that the activity not being a service cannot be subject to levy of service tax under BSS also.
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