2026-VIL-220-CESTAT-CHE-ST
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SERVICE TAX CESTAT Cases

Service Tax - Leviability of Service Tax on excess income earned by freight forwarder - Appellant was promoting and marketing the services of freight forwarders by offering such services to importers and exporters, and had received brokerage/discounts, resulting in income over and above the air cargo and sea cargo freight charge - Department contended that this excess income represented commission or brokerage received towards the promotion or marketing of services provided by overseas freight forwarders, and therefore constituted Business Auxiliary Service - Whether service tax is leviable on the excess income earned by the appellant out of the ocean freight amount under the category of BAS – HELD - as a freight forwarder the appellant has undertaken transport of cargo from one country to another through multimodal transportation and for this purpose they jointly work with their counterparts in other countries and based on agreements with them the profit earned or the loss incurred in each transaction is shared with them - the common thread running in various Tribunal decisions relating to "Profit Share" on Freight Forwarding Services is that the "Business Profits" cannot be taxed to Service Tax, and also that when the two partners are jointly delivering the service in multi-modal transport, operating in different geographical locations, such sharing of profit cannot be taxed to Service Tax - The appellant is not liable to pay service tax on the excess income earned under the category of BAS – The impugned order is set aside and the appeal is allowed
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