OFFICE OF THE COMMISSIONER OF CENTRAL EXCISE: MADURAI-625 002.
Trade Notice No. 16/2009 Dated: 13.03.2009. Service Tax No. 8/2009
Sub: – Service Tax – Clarification regarding leviability of service tax on ship broking activity – Regarding.
The ship broker ensures that the conditions of the contracts are adhered to. They also follow up the movement of goods and freight payment till the cargo reaches its destination. Hence, the activities undertaken by ship brokers are nothing but provision of services on behalf of client for a consideration akin to that of a commission agent. As per Section 65 (19) (vii) (a) of the Finance Act, 1994, “Commission agent” means:-
‘any person who acts on behalf of another person and causes sale or purchase of goods, or provision or receipt of services, for a consideration, and includes any person who, while acting on behalf of another person-
(i) deals with goods or services or documents of title to such goods or services; or
(ii) collects payment of sale price of such goods or services; or
(iii) guarantees for collection or payment for such goods or services; or
(iv) undertakes any activities relating to such sale or purchase of such goods or services.
2. The ship broker is acting on behalf of shipping lines / ship owner and causes provisions of services, for a consideration. The activities of ship broker are akin to a commission agent. Ship brokers not only provide services on behalf of shipping line / ship owner and charterer but also deal with the goods i.e., cargo. This is clearly evident from the fact that it monitors the cargo movement till it reaches the destination. Ship broker also ensures that freight is paid after cargo reaches the destination. Hence the activities undertaken by ship broker are of commission agent and leviable to service tax under Business Auxiliary Service (BAS) of Section 65 (105) (zzb) of the Finance Act, 1994.
3. In view of the above, it is clarified that the service rendered by ship broker is leviable to service tax under Business Auxiliary Service.
4. This may be brought to the notice of all constituent members of your trade associations.
( Authority: Board’s letter F.No.332/41/2008-TRU dated 19.12.2008 )
( Issued from File C.No:IV/16/06/2009-STU )