Services by Overseas Logistics Agents Rendered Outside India not Taxable Before April 2006: CESTAT [Read Order]
CESTAT ruled that services provided by overseas logistics agents outside India are not taxable for the period before April 2006 due to the absence of legal authority under the Finance Act, 1994.
![Services by Overseas Logistics Agents Rendered Outside India not Taxable Before April 2006: CESTAT [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/04/Overseas-Logistics-Agents-Services-CESTAT-TAXSCAN.jpg "Services by Overseas Logistics Agents Rendered Outside India not Taxable Before April 2006: CESTAT [Read Order]")
The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that services rendered by overseas logistics agents outside India were not taxable for the period before April 18, 2006, as there was no legal authority to levy tax on such services before the enactment of Section 66A of the Finance Act, 1994. Modern Cargo Services Pvt. Ltd., engaged in...
The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that services rendered by overseas logistics agents outside India were not taxable for the period before April 18, 2006, as there was no legal authority to levy tax on such services before the enactment of Section 66A of the Finance Act, 1994.
Modern Cargo Services Pvt. Ltd., engaged in freight forwarding, had hired overseas logistics agents for cargo handling at the destination and treated the payments as reimbursements. The department, however, classified these payments as consideration for “Clearing and Forwarding Agent Services” and raised a demand of ₹7.36 crore along with interest and penalties.
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The appellant’s counsel argued that the services were performed entirely outside India and relied on the Bombay High Court’s ruling in Indian National Shipowners Association and the Supreme Court’s decision in Intercontinental Consultants and Technocrats, claiming that reimbursed expenses could not be taxed.
The revenue counsel argued that these were not mere reimbursements but payments for services rendered in connection with the appellant’s own business activities. The revenue’s counsel argued that the payments were for taxable services and justified invoking the extended limitation period for suppression of facts.
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The two-member bench comprising C.J. Mathew (Technical Member) and Ajay Sharma (Judicial Member) observed that prior to the introduction of Section 66A in April 2006, there was no statutory mechanism to tax services received from abroad.
The tribunal found that tax on services from abroad was not permissible before April 2006 and criticized the adjudicating authority for ignoring judicial precedents. The tribunal observed that the adjudicating authority had failed to consider binding precedents and circulars that clarified the scope of taxable services in such cases.
The tribunal set aside the entire demand of Rs. 7.36 crore along with interest and penalties and allowed the appeal filed by the appellant.
To Read the full text of the Order CLICK HERE
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