Customs, Excise and Services Tax Appellate Tribunal (CESTAT): The Division Coram of Sulekha Beevi C.S. (Judicial Member) and P. Anjani Kumar (Technical Member) allowed two appeals (with same issue involved) which were filed aggrieved by the order of original authority. The Tribunal answered that ocean freight charges are not subject to levy of Service Tax under Business Support Services or Business Auxiliary Services.
The appellant is a freight forwarder and is engaged in freight forwarding of import and export shipments. They also collect ocean freight charges from their customers and pay the same to shipping lines/ shipping companies. The appellant did not discharge any service tax on the ocean freight charges. The Department was of the view that the appellant is liable to pay service tax on the ocean freight charges collected by them as these falls under Business Support Services, the second appeal alleged that the appellant, which is a SEZ unit, is not eligible for refund/credit in respect of the input services because the services are not physically consumed within the SEZ unit. Consequently, show cause notices were issued to the appellant, proposing to demand service tax on these two issues. Original authority had confirmed the demand along with interest and imposed penalty. Thus, the instant appeal was filed.
Counsel on behalf of the appellant argued that the demand has been confirmed on ocean freight charges collected by the appellant alleging that the appellant has provided Business Support Services for the period from May 2006 to March 2009. Further, demand of Service Tax of Rs.53,93,244/- has been confirmed alleging that the appellant has wrongly availed the benefit for the period from April 2006 to March 2009. He further submitted that the issue as to whether ocean freight charges collected are subject to levy of Service Tax is no longer res integra.
The Tribunal agreed that the first issue that as to whether the charges collected by the appellant from its customers in the nature of ocean freight are subject to levy of Service Tax under Business Support Services has been considered in various decisions of the Tribunal wherein the Tribunal has held that ocean freight charges are not subject to levy of Service Tax under Business Support Services or Business Auxiliary Services reproducing the case of Greenwich Meridian Logistics India Pvt. Ltd. v. CST, 2016 (43) S.T.R. 215 (Tri.-Mumbai). The Tribunal further followed the decisions relied upon by the counsel of the appellant to hold that the demand of Service Tax on ocean freight charges cannot sustain and requires to be set aside.
Dealing with second issue of demand of Service Tax alleging that the benefit of exemption is not eligible as the input services / approved services have not been consumed within the SEZ unit itself the Tribunal relied on the case of Vision Pro Event Management v. Commr. of C.E. & S.T., 2019 (365) E.L.T. 555 (Tri.—Chennai) and other cases relied on by the counsel for the appellant and concluded that the demand of Service Tax alleging that the appellant has wrongly availed the benefit cannot sustain and requires to be set aside. The appeals were thereby allowed.
[Geodis Overseas (P) Ltd. v. Commr. of ST, 2022 SCC OnLine CESTAT 430, decided on 24-06-2022]
Advocates who appeared in this case :
Shri Raghavan Ramabadran, Advocate, for the Appellant;
Smt K. Komathi, Authorized Representative, Advocate, for the Respondent.
*Suchita Shukla, Editorial Assistant has reported this brief.