The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai held that No Service Tax on Ocean Freight Charges under the head Business Auxiliary Service.
The appellant, M/s. Geodis Overseas Private Limited is a freight forwarder and is engaged in freight forwarding of import and export shipments. They provide various services and collect charges in the nature of LCL Charges, Bill of Lading fee, handling charges, etc., on which they pay Service Tax. They also collect ocean freight charges from their customers and pay the same to shipping lines/ shipping companies. The appellant did not discharge any Service Tax on the ocean freight charges.
The Department was of the view that the appellant is liable to pay Service Tax on the ocean freight charges collected by them as these falls under Business Support Services. Show Cause Notice were issued to the appellant, proposing to demand Service Tax on the issue. After due process of law, the Original Authority confirmed the demand along with interest and imposed penalty. Aggrieved by such order, the appellant is before the Tribunal. The issue is whether the charges collected by the appellant from its customers in the nature of ocean freight are subject to levy of Service Tax under Business Support Services.
The Bench consisting of Sulekha Beevi C.S., Judicial Member and P. Anjani Kumar, Technical Member observed that “This issue has been considered in various decisions of the Tribunal wherein the Tribunal has held that ocean freight charges are not subject to levy of Service Tax under Business Support Services or Business Auxiliary Services. The relevant decision has been given in the case of the case of M/s. Greenwich Meridian Logistics (I) Pvt. Ltd.
Following the same, we have no hesitation to hold that the demand of Service Tax on ocean freight charges cannot sustain and requires to be set aside, which we hereby do”
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