2024-VIL-295-CESTAT-DEL-ST
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SERVICE TAX CESTAT Cases

Service Tax – Appellant arranged for transportation for delivery of finished goods manufactured by them to their clients/buyers - Collection of an amount in excess of the actual freight incurred towards the transportation and delivery of goods to customers - Demand of service tax under Business Auxiliary Service on part of freight charges retained while making payments to the transporters – Demand beyond the scope of show cause notice - HELD - the show cause notice was issued alleging the amount in question to have been charged by the appellant for rendering Business Auxiliary Services whereas Commissioner (Appeals) has held that the said amount to be a difference between the actual freight paid to the transporter and gross freight collected from the buyers of the goods is nothing but the brokerage or commission - Commissioner (Appeals) has gone beyond the scope of show cause notice and confirmed a demand on a different count which was not brought to the notice of the appellant, such confirmation of the service tax amounts to confirmation of tax under new categories and the same is not legally permissible – On merit on the case, facilitating the delivery of goods by engaging transporters cannot be said to be any of the activities under clause (i) to clause (vii) of Section 65(19) of Finance Act defining Business Auxiliary Service. The buyer of goods manufactured by appellant cannot be held to be the service recipient being the party to contract of sale/purchase order. Thus, there is no activity of appellant which may be called as Business Auxiliary Service - The transaction in question is between principal manufacturer to principal buyer. The freight charges are in addition to the value of the goods. The surplus is earned by the appellant by not acting as a service provider to the transporter nor to the buyer - the mere activity of sale cannot be called as taxable service. Earning profit in the said arrangement therefore cannot come under the service tax net - the order under challenge is set aside and appeal stands allowed
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