Satkar Logistics vs Commissioner Of Service Tax, Delhi-III

Service Tax Appeal No. 50411 of 2016 has been filed to assail the order dated December 31, 2015 passed by the Commissioner confirming the

demand of service tax with interest and penalty. The period involved in this Appeal is 2013-14

Service Tax Appeal No.51262 of 2017 has been filed to assail the order dated February 27, 2017 passed by the Commissioner confirming the

demand of service tax with interest and penalty. The period involved in this Appeal is 2014-15.

The appellant is primarily engaged in the business of freight forwarding, clearing and forwarding and other allied activities that involve booking of

Containers/Air Cargo with various Shipping Lines/ Airlines for their customers and recovering other miscellaneous charges from their customers

(mainly importers and exporters). The appellant provides cargo space to the customers who are importers/ exporters of goods. The appellant pays

charges for space booking to different Shipping Lines/ Airlines and later on sells such space to the exporters/ importers at a slightly higher amount.

The difference between the amount paid by the Appellant to the Shipping Lines/Airlines and the amount recovered by the Appellant from the

customers (exporter/importers), is called the “mark-upâ€​.

The Department was of the view that this “mark-up†was for services provided by the Appellant to customers and was, therefore, liable to

service tax under the category of “Support Services of Business or Commerce, BSSâ€, covered under section 65(104) of the Finance Act, 1994,

the Finance Act. The Department was also of the view that after July, 2012, the services are not covered by any service notified in the negative list

and, therefore, continue to be taxable.

Show cause notices dated May 15, 2015 (for the period 2013-14) and May 23, 2016 (for the period 2014-15) were issued to the appellant

demanding service tax with interest on the mark-up value. The Adjudicating Authority however, did not accept the contentions raised on behalf of the

appellant that it was not liable to pay service tax and confirmed the demand with interest and penalty.

Ms. Surbhi Sinha, learned counsel appearing for the appellant has stated that the Department had also confirmed the demand of service tax for the

period 2008-09 to 2012-13 against the appellant, which decision was challenged by the appellant in Service Tax Appeal No. 52534 of 2015 and by a

decision dated August 21, 2018, the appeal was allowed and the order confirming the demand the service tax was set aside. The period involved in the

decided appeals covers the present period and, therefore, she contends that these two appeals, for the reasons stated in the earlier order of the

Tribunal, should be allowed and the demands that have been confirmed should be set aside.

Dr. Radhe Tallo, learned Authorized Representative for the Department has very fairly stated that the same issue is involved in these two appeals.

The Division Bench accepted the contention advanced on behalf of the appellant in the earlier decision that the appellant was only trading in space

and was not providing any service. The Division Bench also noted that the issue involved in the Appeal was covered by the decisions of the Tribunal

in Greenwich Meridian Logistics (India) Pvt Ltd. V. Commissioner, 2016 (43) S.T.R 215 (Tribunal) and Commissioner of Service Tax, New Delhi vs

Karam Freight Movers, 2017(4) G.S.T.L 215 (Tri.-Del).

The post negative list w.e.f. 01.07.2012 was also involved in the Appeal that was decided.

Thus, following the aforesaid decision of the Tribunal, the orders dated December 31, 2015 and February 27, 2017 passed by the Commissioner

with penalty and interest deserve to be set aside and are set aside. The two Appeals bearing nos. of Service Tax Appeal No. 50411 of 2016 and

Service Tax Appeal No.51262 of 2017 are, accordingly, allowed.