Service Tax
TRT-2025-
Cestat New Delhi
Date:-30-05-24
In:-
Issue Favourable to Tax Payer ?:-
Order Date – 30 May 2024
Parties: Commissioner of Central Goods, Service Tax and Central Excise, Delhi Vs Pristine Logistics and Infra Projects Private Limited
Facts –
- The Respondent, Pristine Logistics and Infra Projects Private Limited, received a show cause notice on the ground that the appellant failed to pay the Service Tax on (a) Corporate Guarantee extended for their associate enterprises and (b) margin retained by them for booking the space of cargo in the Airlines/ Ships for their importer/exporter.
- On appeal, the demand was set-aside.
Issue –
- Whether provision of corporate guarantee without consideration and profit/markup is liable to service tax?
Order –
- The Tribunal observed that the issue of taxability of providing Corporate Guarantee without any consideration was dealt at length by this Tribunal in the case of Commissioner of CGST & Central Excise Vs Edelweiss Financial Services Ltd wherein it was held that any activity must, for the purpose of taxability under Finance Act, 1994, not only, in relation to another, reveal a “provider‟, but also the flow of ”consideration‟ for rendering of the service. In the absence of any of these two elements, taxability under section 66B of Finance Act, 1994 will not arise.
- The issue on taxability of service tax on profit/mark up is no more res integra as the same has been decided in catena of decisions, in the case of M/s Tiger Logistics (India) Ltd., vs Commissioner of Service Tax-II, Delhi “it was held that if the space on the ships which it bought cannot be sold to its customers fully, or due to market conditions, or is compelled to sell at lower than purchase price, the appellant incurs loss. In a contrary situation, it gains profits. This activity is a business in itself on account of the appellant and cannot be called a service at all. Neither can the profit earned from such business be termed consideration for service.”
- Hence the Tribunal upheld the impugned order and dismiss the appeal.
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