Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  The GSTN has issued an Advisory dated 21.04.2026 about the introduction of an Offline Tool for the Invoice Management System (IMS)  *  CBIC extends due dates for filing of FORM GSTR 3B  for the month of April 2026 *  Interest cannot be imposed in adjudication order, if not demanded/quantified in show cause notice : Allahabad HC *  Wheelchairs with toileting facility eligible for exemption: CESTAT affirms customs duty exemption to importer *  Industries urge GST council to allow inverted duty refunds on input services *  Tamil Nadu GST dept introduced virtual hearing facility for GST appeals under under section 107 of the TNGST act: detailed guidelines  *  CIC urges authorities to implement GST evasion complaint tracking system *  Even if the assessee opts "NO" for personal hearing in form DRC-06 ,The mandatory requirement under section 75(4) to grant opportunity of hearing cannot be waived:Gujarat High Court  *  Glufosinate imports curbs imposed by govt *  Government extends Re-import period for exported cut & polished diamonds *  CIC flags lack of tracking system for tax evasion complaints,urges GST authorities to improve transparency *  No Custodial Interrogation needed in GST fraud case based on documentary evidence already in Department's Possession : Chattisgarh HC *  Orders under section cannot be sustained if passed without considering the taxpayer's objections and without granting a personal hearing:Gujarat High Court *  Mere cancellation of supplier's registration cannot,by itself,justify denial of ITC or cancellation of the recipient's registration:Bombay High Court *  High Court sets aside GST notice citing factual errors and natural justice violations *  Provisional Bank Attachment under Section. 110 of Customs Act Unsustainable Beyond Statutory period without Extension order: Bombay HC orders to defreeze accounts *  Post Clearance MRP Alteration by Distributor Does not attract Differential Customs Duty: CESTAT *  DGFT Expands scope of 'Screws' classification under RoDTEP Scheme  *  E-way bills surze to all time high of 140.6 million in March *  GST Exemption Allowed on Pure Labour Services for Standalone Houses: AAR  *  GST Payable Only on Margin in Second-Hand Car Sales, Subject to Strict Conditions and No ITC Claim: AAR *  DGFT rolls out procedure for allocation of calcined coke *  GST portal update : Pre-deposit amount now editable in Appeals *  J&K HC declared TMT scrap a 'Specified Good' eligibile for GST refunds under Support Scheme  *  Pigmy agents are employees of banks; no GST can be levied on commission  paid to them : Karnataka HC *  DGFT Revises HS Code Description for Screws Under RoDTEP *  GST Registration Cancellation Invalid Without Proper Service of Notice: Allahabad High Court. *  Bengaluru CGST | GST Backlog Appeals Deadline Fixed at June 30, 2026 *  No Time Bar on Refund of Service Tax for Services Not Rendered: CESTAT  Remands Indiabulls Case for Unjust Enrichment Check. *  Supreme Court Holds Renewable Energy Incentive Must Benefit Generators, Not Be Adjusted in Tariff
Subject News *   Delhi HC Quashes Order, Says Reminder Cannot Validate Improperly Served GST SCN *  KARNATAKA HIGH COURT REMANDS GST SHORTFALL MATTER DUE TO ABSENCE OF PERSONAL HEARING   *  CESTAT cancels confiscation and penalties on imported computer cabinet cases: Custom duty restricted to 111 surplus units *  Deposit of tax during search or investigation cannot be treated as 'Voluntary Payment' : Bombay High Court *  Section 76 of the CGST cannot be invoked where the tax has already been duly deposited, even if through another registration of the same entity: Madras High Court *  Sec 74 allows use of material regardless of source; illegality or flaws in section 67 search do not vitiate valid adjudication: HC *  Inter-State transfer of ITC on Amalgamation permissible as given under section 18(3) read with rule 41 of the CGST rules, 2017: Gujarat High Court *  HC: No GST on commisson paid to Pigmy Agents *  IGST refund denial on illegible bill of lading invalid absent chance to furnish docs; merit reconsideration in appeals directed: HC *  ITC is not admissible on GST paid on leasehold rights of land used fpr setting up an air seperation plant: AAAR,Tamil Nadu *  GST: No penalty under Section 74 after voluntary ITC reversal due to non-existent supplier : High Court *  TN AAAR denies GST ITC on Land Lease under Sec. 17(5)(d) for setting up plant and machinery *  GST proceedings quashed as notices sent to old address, despite updated address in registration *  Importer Can’t Be Penalised for Alleged IGCR Procedural Lapses Without Evidence of Departmental Error: CESTAT *  Structured Healthcare Training Not ‘Charitable Activity’, 18% GST Payable: AAR  *  CESTAT As The Appellate Authority For Central Sales Tax Disputes: A Paradigm Shift Under Finance Act, 2023 *   Rs. 25K Cost Imposed On SGST Joint Commissioner for Attaching Bank  Accounts Without Forming Mandatory “Opinion”: Bombay HC *   Ex-Parte GST Order Without Hearing Violates Natural Justice: Karnataka  High Court Quashes Adjudication and Bank Attachment.  *   Retrospective GST Cancellation Can’t Invalidate Genuine Transactions:  Jaipur Commissioner (Appeals) Quashes Rs. 95,670 ITC Demand. *   GST Pre-Deposit Non-Compliance: Allahabad High Court Allows Appeal  Subject to Rs. 30 Lakh Balance Deposit, Recognises Offline Filing. *  Documentary Nature of Evidence: Allahabad High Court Grants Bail in Rs. 32.66 Crore Fake ITC Fraud Case *  Supreme Court Flags Systemic Bias in Army’s Permanent Commission Process for Women Officers *  Re-Determination of Land Compensation Can Be Based on Appellate Court Awards, Clarifies Scope of S. 28-A: Supreme Court. *  Supreme Court Imposes Rs. 5 Lakh Costs On Rent Authority Officer For Acting Beyond Jurisdiction. *  DGGI Meerut | Court Denies Bail to Accused in Claiming Fake ITC And Export Refunds *  Denial of GST Rate Revision Benefit to Contractor Violates Article 14: Rajasthan HC *  GST Registration Cancellation for Non-Filing of Returns: Gauhati High Court Directs Restoration on Compliance. *   Supreme Court Quashes FEMA Adjudication Orders, Revives Proceedings at  Show Cause Stage. *   Higher Rank, Harsher Punishment Justified: Supreme Court Restores Dismissal  of Bank Manager in Misappropriation Case. *   Limitation for Export Refund to Be Counted from Foreign Exchange Realisation,  Not From Export Invoices Issuance: CESTAT  

Comments

Print   |    |  Comment

PJ/Case Law/2013-14/1999

Whether booking of cargo space in shipping lines leviable to service tax under ‘BAS’?

Case:- GREENWICH MERIDIAN LOGISTICS (I) PVT. LTD. VERSUS COMMR. OF S.T., MUMBAI

Citation:- 2013 (32) S.T.R. 753 (Tri. - Mumbai)

Brief Facts:-  The Revenue has filed the COD application for condonation of delay of 22 days in filing the cross objection. The delay is due to delay in receipt of comments from the lower formations for filing the cross objection. Considering the reasons stated as satisfactory, we condone the delay in filing the cross objection. M/s. Greenwich Meridian Logistics (I) Pvt. Ltd. are a freight forwarding agency and they are also registered as a multi-modal transport operator. They book cargo space in shipping lines and thereafter, they provide/allot the space to their customers. The department was of the view that the activity undertaken by the appellant comes within the category of "Business Auxiliary Service" and the appellant was promoting the service rendered by the shipping lines. Accordingly, a service tax demand of Rs. 2,27,02,697/- was con­firmed against the appellant for the period 2005-06 to 2009-10 and an amount of Rs. 48,43,493/- for the period April, 2010 to March, 2011. Interest on the said de­mand was also confirmed apart from imposing penalties under the provisions of Section 76 of the Finance Act, 1994. Aggrieved by the said decision, the appellant is before us.
 
Appellant Contentions:- The appellant submits that they have booked car­go space from the shipping lines by purchasing the space and thereafter, they sold the space to their customers. This activity is one of trading and therefore, no service has been rendered to the shipping lines. Secondly, it is argued that they are a multi-model transport operator and therefore, under the provisions of Mul­ti model Transportation of Goods Act, 1993 they have to be considered as "Carri­ers" and therefore, the amount charged by them should be considered as "freight". If, this is done, the question of charging Service Tax on freight would not arise. The appellant also relies on a number of decisions in support of the above contention.
 
(i)          Skylift Cargo Pvt. Ltd. v. CST, Chennai - 2010 (17) S.T.R. 75 (Tri.‑ Chennai)
(ii)         BAX Global India Ltd. v. CST, Bangalore - 2008 (9) S.T.R. 412 (Tri.-­ Bang.)
(iii)        Baroda Electric Meters Ltd. v. CCE - 1997 (94) E.L.T. 13 (S.C.)
(iv)        Karnavati Club Ltd. v.1101- 2010 (20) S.T.R. 169 (Guj.)
(v)         Interocean Shipping Co. v. CST, Delhi - 2012-TIOL-CESTAT-Del = 2013 (30) S.T.R. 244 (Tri.)
(vi)        Group M. Media India Pvt. Ltd. v. CCE, Thane - 2012-TIOL-804- CESTAT-MUM
 
Accordingly, it is pleaded that stay be granted.
 
Respondent Contentions:- The respondent submits that the appellants are freight forwarders and booking cargo spaces and selling the same to the importers/exporters. They are rendering a service to the ship­ping lines and the consideration is received by them by way of mark-up in price and therefore, the service rendered by the appellant merits classification under "Business Auxiliary Service". He relies on the decision in the case of JSA Forwarders v. CST, Chennai – 2009 (13) S. T.R. 396 (Tri.-Chennai), Miscellaneous Order No.40389/2013, dated 4-2-2013 passed by the CESTAT Bench at Chennai upheld by the Hon'ble High Court of Madras in Leap International Pvt. Ltd. v. CST, 2013-TIOL-363-HC-MAD-ST = 2013 (32) S.T.R. 257 (Mad.). The Revenue relies on this Tribunal decision in the case of Phoenix International Freight Services Pvt. Ltd. vide Stay Order No. S/450-451/13/CSTB/C-I, dated 8-4-2013 and accordingly, it is pleaded that the appellant be put to terms.
 
Reasoning of Judgment:- We have carefully considered the submissions made by both the sides. Cargo space is not goods; therefore, booking of cargo space and trading in cargo space cannot be considered as supply/sale of goods and has to be considered as supply of service. Any activity other than supply of goods amounts to supply of service. Therefore, we do not find any merit in the argu­ment of the ld. Counsel that they have indulged in trading activity and not in service activity. Secondly, we also do not find much force in the argument of the appellant that service has to be rendered always as an agent. The law does not warrant that the service provider has to be an agent. As in the case of goods, ser­vice also can be supplied/rendered on a principal to principal basis. As regards the case laws cited by the appellant in the case of Skylift Cargo Pvt. Ltd. the facts of that case related to discount allowed by the airlines and the question was whether the discount can be considered as commission and it was held that the 'discount" is not commission. We do not know how the ratio of this decision applies to the facts of the present case. As regards the Box Global India Ltd. case relied upon by the appellant, the issue therein was whether the service rendered as freight forwarding agency is classifiable as CHA service and it was held that the said service would not come within the purview of CHA services which deals with entry or departure of conveyances or import or export of goods at any customs station. In the present case, the demand is not under CHA service but under BAS and therefore, reliance on this decision also does not support the case of the appellant. In the Baroda Electric Meters Ltd. case, the issue was whether equalised freight can be added to the assessable value of excisable goods sold for the purposes of levy of excise duty. It was held that it cannot be added. We do not find how this ratio would apply to the facts of the present case. Similarly, in the case of Karnavati Club the issue for consideration was in the service rendered by a club to members is exigible to service tax or not. We do not find any club member relationship involved in the case of Freight Forwarding Agency service. Thus most of the decisions relied upon by the ld. Counsel for the appellant do not have any application or relevance to the facts of the present case and there­fore, we do not find any merit in the arguments made by the ld. Counsel for the appellant. This Tribunal in the case of JSA Forwarders case (cited supra) relied upon by the Revenue dealt with a situation wherein the issue was whether ser­vice rendered by a freight forwarder would merit classification under BAS or not. After looking at the comprehensive definition of BAS, the Tribunal came to the prima facie conclusion that sale of cargo space would also attract service tax levy under the head "Business Auxiliary Service". Similarly, in the case of Leap International Pvt. Ltd. case, this Tribunal considered a question whether sale of cargo space can be considered as BAS or not and concluded that the said service might merit classification under BAS. The appeal against the said decision before the Hon'ble High Court of Madras was dismissed.In view of the above, we are of the prima facie view that the appellant has not made out a case for complete waiver of pre-deposit of dues adjudged against them. The appellant has also not pleaded any financial hardship nor any evidence in this regard has been placed before Tribunal. In the absence of any prima facie case and the absence of any financial hardship, the interest of Revenue has to be taken care of. Accordingly, we direct the appellant to make a pre-deposit of Rs. 89 lakhs which as per the appellant would be the demand for normal period of limitation. The said deposit shall be made within a period of eight weeks from today and compliance reported on 11-9-2013. On such compliance, the balance of dues adjudged shall stand waived and recovery thereof stayed during the pen­dency of the appeal. The ld. Counsel for the appellant is present in the Court and has noted the orders given above and that constitutes sufficient notice to the ap­pellant to comply with this order. In case of non-compliance, the appeal is liable to be dismissed without any further reference to the Tribunal.
 
Decision:-Stay granted partly.

Comment:- The substance of this case is that booking of cargo space in shipping lines primarily amounts to rendering of service and promoting the service of the shipping lines. As such, the activity is leviable to service tax under the category of “BAS”.
 

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com