Order date – 13 September 2022

Facts – 

• The Respondent, M/s. Chemical Process Piping Pvt. Ltd., was issued a show cause notice demanding service tax of Rs.42,16,001/- for the period October 2011 to March 2016 and for amount of Rs.2,381/- for the period April 2016 to June 2017.
• It was alleged that the assessee was providing business auxiliary services for the period prior to July 2012 in terms of Section 63(19) of Chapter V of the Finance Act, and after July 2012 they were providing taxable services. 
• Also it was alleged that the assessee on behalf of overseas clients facilitated in the process of transportation of consignment from taxable territory to final destination. They engaged freight forwarder/transporter as per their requirements, who provided the services of ocean freight, Customs clearance, THC, handling etc. For these services they raised invoices on the assessee.
•  It was alleged that while doing so, the respondent/assessee charged huge mark-up i.e. the difference between the value of the services received by the service provider and charged by the respondent from their clients abroad. This mark-up being in nature of commission for providing the above referred services to the clients abroad, the respondent was required to discharge the service tax liability.
• The case was decided in favour of the Respondent and demand was set aside.
• Aggrieved, the revenue filed an appeal.

Issue – 

• Whether the appellant is liable to service tax for providing facility in the process of transportation of consignment

Order – 

• The Tribunal observed that the issue involved in the matter is no longer res integra and has been covered by the Board circular in favour of the respondent.
• Relying on the case of BVC Logistics Pvt. Ltd. [CESTAT New Delhi], in which it was held freight is paid to the shipping line and freight is collected from client-shippers in two independent transactions. In the shipping line there is possibility of trading in space or slots on vessels. It cannot be stated that such trading was figment and only freight was transacted.
• Also according to Circular No. 197/7/2016-ST dated 12.08.2016 it was held that freight forwarder, when acting as a principal, will not be liable to pay service tax when the destination of the goods is from a place in India to a place outside India.
• Therefore, the impugned order is upheld and the appeal filed by the Revenue is dismissed.