2026-VIL-531-CESTAT-CHE-ST
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SERVICE TAX CESTAT Cases

Service Tax - Taxability of ocean freight charges collected by a multimodal transport operator - Appellant arranges for the transportation of export/import cargo in containers by sea through shipping agencies. The appellant collects the negotiated and agreed amount from the customers as ocean freight charges in the case of exports and imports - Department of the view that the appellant had made arrangements with the shipping companies for the provision of international freight service for the transportation of goods on their own account and the ocean freight charges with markup received as 'consideration' for the services provided to their customers is liable to service tax - Whether the ocean freight charges collected by the appellant, who is a multimodal transport operator, are liable to service tax - HELD - The issue of taxability of ocean freight charges collected by a multimodal transport operator is no more res-integra and has been consistently decided in favor of the assessee by the coordinate benches of the Tribunal - The Tribunal relied on the decision of the Supreme Court in the case of Union of India v Intercontinental Consultants and Technocrats Pvt Ltd, wherein it was held that the reimbursable expenses like freight charges cannot be included in the value of taxable services until the amendment made to Section 67 of the Finance Act, 1994 with effect from 14.05.2015 - Further, the activity of the appellant is one of trading in cargo space in containers, which is a principal-to-principal transaction and does not involve provision of any service - The department has not provided any evidence to show that the appellant is acting as an agent of the shipping lines or the exporters/importers. Accordingly, the demand of service tax on the ocean freight charges collected by the appellant is set aside and the appeal is allowed
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