Principal Commissioner CGST Delhi South vs. M/S Haiko Logistics PVT INDIA

Facts

The Principal Commissioner CGST, Delhi South, has appealed an order of the Customs Excise and Service Tax Appellate Tribunal (CESTAT) dated August 10, 2023. The appeal concerns a demand of Service Tax amounting to Rs. 14,99,54,386/-. The respondent, M/s Haiko Logistics Pvt. India, operates as a Multi-Modal Transport Operator and incurs expenses like customs duty, air freight, and ocean freight on behalf of its clients, which are subsequently reimbursed. The CESTAT had dropped the demand, finding that these reimbursements were not taxable as they were in the nature of reimbursements of expenses incurred for clients, without any markup. The appellant disputes this finding, arguing that the CESTAT failed to consider additional evidence.

Held

The Court held that no substantial issue of law arises from the appeal. The CESTAT's finding that the demand was rightly dropped was based on two key reasons. Firstly, the demand was proposed under the category of 'BSS' which was not in existence during the disputed period (2014-15), rendering the demand unsustainable as it was based on obsolete provisions. Secondly, the CESTAT correctly observed that amounts like customs duty, BAF & CAF charges, ocean freight, and air freight were paid by the appellant on behalf of clients and subsequently reimbursed, thus being in the nature of reimbursements and not taxable. The Court found no reason to interfere with the CESTAT's order. The appeal was consequently dismissed.

Key Issues

1. Whether the demand of Service Tax of Rs. 14,99,54,386/- dropped by the CESTAT is correct, considering the income shown as non-taxable in Financial Data Summary Sheets (FDSS), without taking into account additional evidence like bills, challans of duty payments, and supporting documents to ascertain the correctness of a Chartered Accountant Certificate, as per Section 65B(44) of the Finance Act, 1994? 2. Whether the Respondent/Assessee is liable to pay Service Tax on the difference in the figure of 'Income' in Form ST-3 and Form 26AS? Petitioner's Arguments: The appellant (Principal Commissioner CGST) argues that the CESTAT erred by not considering additional evidence, including bills and challans, to verify the Chartered Accountant Certificate. They contend that the CESTAT's reliance solely on the Adjudicating Authority's findings was insufficient. Respondent's Arguments: The respondent (M/s Haiko Logistics Pvt. India) argues that the amounts in question represent reimbursements of expenses incurred on behalf of clients, such as customs duty and freight charges, and do not include any markup. They also point out that the demand was raised under an obsolete provision (BSS) which was not in existence during the disputed period.