No Service Tax Demandable on GTA service in Absence of Over Charges other than Actual Freight Charges: CESTAT [Read Order]

The Chennai bench of Customs, Excise and Service Tax Appellate Tribunal(CESTAT) service tax is not  demandable on GTA service in absence of over charges other than actual freight charges.

 M/s. Jetway Forwarders Private Limited , the appellant is registered and rendering services as a Custom House Agent (CHA). It appeared to the Revenue that the appellant had collected freight charges for transportation of goods by road which, after exchange of a few letters, resulted in the issuance of a Show Cause Notice wherein it was proposed to demand Service Tax on the GTA services allegedly rendered by the appellant. 

During adjudication, the Additional Commissioner observed that as a Custom House Agent, the appellant was bound to render services with the primary objective of taking out the goods from the factory premises of their customers for onward clearances of the goods for export, or vice versa in the case of imports, which amounted to the services under Goods Transport Agency (GTA) within the meaning of Section 65(105)(zzp) of the Finance Act, 1994. The Additional Commissioner proceeded to confirm the demand, as proposed, along with appropriate interest under Section 75 of the Act and penalties under Sections 77 and 78 of the Act.

The appellant approached the Commissioner (Appeals) against the above demand, but however, even the first appellate authority having rejected their appeal. 

It was submitted that the appellant has rendered only the services of a Customs House Agent(CHA) and, in some cases, only undertook transportation of goods as an agent, for which it only collected the transportation charges without any mark-up; moreover, such transportation charges which were collected, which were on actuals, were only in the nature of reimbursement which were ultimately borne by the exporter or importer. 

It was contended that the entire demand was nothing but the expenses incurred by the appellant on behalf of their customers as pure agents and that such expenses were costs incurred by the appellant which were not in connection with the CHA service. Per contra, Superintendent supported the findings in the impugned order.

It was viewed that the first appellate authority has accepted the fact that the appellant had only collected the freight charges which were merely reimbursement and without any margin. The Two member coram comprising Mr. P Dinesha, Member (Judicial) and  Mr.M  Ajit Kumar, Member (technical)  set aside the impugned order and allowed the appeal with consequential benefits. 

Smt. J. Ragini, Advocate and Smt. Anandalakshmi Ganeshram, Superintendent appeared respectively..

To Read the full text of the Order CLICK HERE

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