Judgments
Customs, Excise and Service Tax Appellate Tribunal
Gac Shipping India Pvt Ltd vs. Commissioner of GST & Central Excise
MANU/CC/0240/2024
12.07.2024
Service Tax
Mark up value in ocean freight is not liable for service tax under Steamer Agent Service
The Appellants are registered with the Service Tax Department under the category of 'Custom House Agents', 'Transport of Goods by Road' and 'Business Auxiliary Service'. During the scrutiny of accounts by the officers of Central Excise, it was found that the appellant had collected amount in excess in the guise of ocean freight charges from various clients for the relevant period for import/export of cargo and not paid service tax for the same under Steamer Agent Service.
Show Cause Notice was issued proposing to demand the service tax along with interest and for imposing penalties. After due process of law, the original authority confirmed the demand of Rs.8,623 along with interest and imposed penalties under Sections 76 and 77 of the Finance Act, 1994. In appeal, Commissioner (Appeals) upheld the same. Hence the appellant is before this Tribunal.
The issue pertains to the appellant having added some markup value/ margin on the ocean freight charges and collected the same from their clients. Revenue is of the opinion that the mark up value in ocean freight is liable for service tax under Steamer Agent Service.
The issue is no longer res integra. It was clearly held in Indian Oxygen Ltd. v. Collector of Central Excise, that the duty of excise is a tax on the manufacturer and not a tax on the profits made by a dealer on transportation. In view of that decision, the view taken by the Tribunal cannot be sustained.
The above judgment of the Hon'ble Supreme Court and the judgments cited by the appellant, including those in their own case makes it clear that the profit made by the appellant by markup of transport charges which has nothing to do with the activity of Steamer Agent Service would not be liable to Service Tax by adding it to the value of the said taxable service. The impugned order is hence set aside. Appeal allowed.
Tags : Demand Confirmation Legality
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