Case Law Details
Jetway Forwarders Private Limited Vs Commissioner of Central Excise (CESTAT Chennai)
Introduction: The CESTAT Chennai recently made a crucial judgment in the case of Jetway Forwarders Private Limited Vs Commissioner of Central Excise. The primary issue in contention was the Service Tax demanded on GTA services and whether it’s applicable in cases where no overcharges are made beyond the actual freight charges.
Key Details from the CESTAT Chennai Order:
1. Background: Jetway Forwarders Private Limited, registered as a Custom House Agent (CHA), was under the scanner for collecting freight charges for transporting goods by road. The Revenue’s concern resulted in a Show Cause Notice, suggesting a Service Tax demand on the GTA services provided by the company.
2. The Contention of Jetway Forwarders: In response, Jetway emphasized that they only functioned as a CHA and occasionally managed goods transportation as agents without adding any mark-up to the charges. The charges were described as reimbursements, eventually borne either by the exporter or importer.
3. The Decision of the Lower Authorities: Upon adjudication, the Additional Commissioner opined that Jetway’s activities amounted to GTA services within the ambit of Section 65(105)(zzp) of the Finance Act, 1994, leading to the confirmation of the proposed Service Tax demand. The company’s subsequent appeal to the Commissioner (Appeals) was also dismissed.
4. Contradictory Order for a Different Period: Jetway pointed out an order (Order-in-Appeal No. 159/2017) by the Commissioner (Appeals) for a different period, where a similar Service Tax demand against them was dropped. The Revenue had accepted this order, which led Jetway to argue for consistency in the Revenue’s stand.
5. Final Observations by CESTAT Chennai: Upon evaluation, the Tribunal observed that there was no evidence of Jetway collecting any additional charges beyond actuals. Drawing parallel to the previous order where a similar demand was dropped, the Tribunal held that the Service Tax demand in this case was unwarranted.
Conclusion: The CESTAT Chennai’s decision underscores the importance of clear documentation and consistency in judgments. While the tribunal emphasized the absence of overcharges beyond actual freight charges, businesses should remain vigilant and maintain transparent records to avoid any future ambiguities.
FULL TEXT OF THE CESTAT CHENNAI ORDER
1. The undisputed facts, as could be gathered from the Order-in-Original as well as the impugned Order-in-Appeal are that the appellant is registered and rendering services as a Custom House Agent (CHA). It appeared to the Revenue that the appellant had collected freight charges for transportation of goods by road which, after exchange of a few letters, resulted in the issuance of a Show Cause Notice dated 16.06.2011 wherein it was proposed, inter alia, to demand Service Tax on the GTA services allegedly rendered by the appellant.
2. It appears that the appellant filed a detailed reply rebutting the allegations levelled against it and also by contending that the invocation of extended period of limitation was bad; but however, during adjudication, the Additional Commissioner observed that as a Custom House Agent, the appellant was bound to render services with the primary objective of taking out the goods from the factory premises of their customers for onward clearances of the goods for export, or vice versa in the case of imports, which amounted to the services under Goods Transport Agency (GTA) within the meaning of Section 65(105)(zzp) of the Finance Act, 1994. Thus, vide Order-in-Original No. 48/2012 dated 21.06.2012, the Additional Commissioner proceeded to confirm the demand, as proposed, along with
appropriate interest under Section 75 ibid. and penalties under Sections 77 and 78 ibid.
3. The appellant appears to have approached the Commissioner (Appeals) against the above demand, but however, even the first appellate authority having rejected their appeal vide Order-in-Appeal No. 36/2014 (M-III) ST dated 18.02.2014, the present appeal has been filed before this forum.
4. Heard Smt. J. Ragini, Ld. Advocate and Smt. Anandalakshmi Ganeshram, Ld. Superintendent.
5.1 Ld. Advocate would submit at the outset that the appellant has rendered only the services of a CHA and, in some cases, only undertook transportation of goods as an agent, for which it only collected the transportation charges without any mark-up; moreover, such transportation charges which were collected, which were on actuals, were only in the nature of reimbursement which were ultimately borne by the exporter or importer, as the case may be.
5.2 She would also contend that the entire demand was nothing but the expenses incurred by the appellant on behalf of their customers as pure agents and that such expenses were costs incurred by the appellant which were not in connection with the CHA service.
5.3 She would also invite our attention to the order of the Commissioner (Appeals)-first appellate authority in Order-in-Appeal No. 159/2017 (STA-I) dated 28.03.2017 for the period from 2011-12 to 2012-13 wherein their appeal against similar demand came to be allowed in their favour by the first appellate authority. She would invite our attention to the relevant observations / findings in the said order and further contended that the Revenue has accepted the above order wherein the demand as well as the impugned Order-in-Original therein came to be set aside by the first appellate authority; that the facts being more or less similar, the Revenue cannot take an inconsistent stand and hence, prayed for setting aside the impugned demand here in the case on hand.
6. Per contra, Ld. Superintendent supported the findings in the impugned order. She would also specifically invite our attention to the findings of the lower authorities where, apparently, they have not accepted the contentions of the appellant.
7. After hearing both sides, we find that the only issue to be decided by us is: whether the Department was right in demanding Service Tax on the alleged GTA services from the appellant?
8.1 Admittedly, for the subsequent period, vide in Order-in-Appeal No. 159/2017 (STA-I) dated 28.03.2017, the first appellate authority has accepted the fact that the appellant had only collected the freight charges which were merely reimbursement and without any margin. Here also, in the case on hand, admittedly, the appellant has not collected anything other than the actuals, which is clear from the invoices placed along with the appeal memorandum.
8.2 Even from the Show Cause Notice we do not find any allegations against the appellant as to the collection of any charges over and above the actuals.
9. In view of the above discussions and also in view of the fact that a similar demand has been dropped by the first appellate authority although for a different period, we set aside the impugned order and allow the appeal with consequential benefits, if any, as per law.
(Order pronounced in the open court on 18.08.2023)
