The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed service tax demand and held that amendment charges, container detention charges fall under the purview of Export of Service Rules and is outside service tax net.
The Appellant, M/s Thierra Logistics Pvt. Ltd., Kolkata, are engaged in the business of providing Clearing & Forwarding Agent Services, including freight services to exporters. The Additional Director General, DGGSTI, Kolkata, initiated an investigation against the Appellant on the allegation that they were not discharging their service tax liability properly by not disclosing the actual value of service in their ST-3 returns.
As a result of the investigation, a show cause notice dated 25.08.2017 was issued to the Appellant and Service Tax on Miscellaneous income like Amendment Charges, Container Detention charges etc. not shown in ST-3 return – Rs.16,64,393/- was demanded.
Regarding the demand of Service Tax of Rs.16,64,393/- on Miscellaneous income like Amendment Charges, Container Detention charges etc. not shown in ST-3 return, the Appellant stated that they have collected consideration towards Amendment Charges, Container Detention Charges etc and other charges in foreign currency from foreign customers with respect to onward movement of goods from India. Such charges were incurred by them during the course of providing Clearing and Forwarding Agency Services for onward movement of goods from India to foreign destination.
The Appellant further submitted that they have been paying service tax for the considerations received as Amendment Charges, Container Detention Charges, Customer Administrative Charges, and other charges when charged on Indian customers in Indian Currency.
As per Rule 10 of the Place of Provision of Services Rules 2012, the place of provision of the service of transportation of goods by air/sea, other than by mail or courier, is the destination of the goods. It follows that the place of provision of the service of transportation of goods by air/sea from a place in India to a place outside India, will be a place outside the taxable territory.
A Two-Member Bench comprising Ashok Jindal, Member (Judicial) and K. Anpazhakan, Member (Technical) observed that “It follows that the place of provision of the service of transportation of goods by air/sea from a place in India to a place outside India, will be a place outside the taxable territory. In this case also, the requirement of Rule 6A of the Service Tax, 1994, as amended, stands duly satisfied. Accordingly, we hold that these charges are within the purview of the Export of Service Rules and hence outside the service tax net.”
“Further, we observe that the Appellant have been paying service tax for the considerations received as Amendment Charges, Container Detention Charges, Customer Administrative Charges, DTHC Charges, Handling Fees, Seal Charges and other charges when charged on Indian customers in Indian currency. In view of the above findings, we hold that the demand confirmed in the impugned order on this count is not sustainable and accordingly, we set aside the same” the Bench concluded.
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