2026-VIL-1605-CESTAT-CHE-ST
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SERVICE TAX CESTAT Cases

Service Tax – Taxability of freight rebate, brokerage and incentives, Nature of activity of cargo space seller – Appellant is a registered service provider of Customs House Agency Services and other services - Demand of service tax on incentives received, airway bill fees, rebate and brokerage. Department took position that activities undertaken by appellant with respect to incentives, airway bill fees, rebate and brokerage would fall under Business Auxiliary Services - Whether profit earned by sale and purchase of cargo space and freight rebate, brokerage and incentives earned by a freight forwarder acting as principal can be levied to service tax under Business Auxiliary Services – HELD – The profit earned by sale and purchase of cargo space cannot be levied to service tax. The Tribunal has in a number of similar decisions found that the profit earned by sale and purchase of cargo space cannot be levied to service tax. The issue is no more res integra and the Tribunal in its prior decisions has held that demands made on similar allegations have been set aside - A freight forwarder when acting as a principal will not be liable to pay service tax when the activity involves sale of cargo space as difference between price at which cargo space is booked and price at which it is offered to customers. The activity of selling cargo space is distinct from providing taxable services under BAS or any other category of services under the Finance Act – Demands for service tax on incentives received, airway bill fees, rebate and brokerage are set aside as such amounts do not constitute consideration for any taxable service - The impugned order is set aside and the appeals are allowed
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