Case Details: Principal Commissioner of Service Tax, Chennai-I Versus Pawan Cargo Forward Pvt. Ltd. (2025) 33 Centax 227 (S.C.)
Judiciary and Counsel Details
- B.V. Nagarathna & K.V. Viswanathan, JJ.
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S/Shri N. Venkataraman, A.S.G., Kritagya Kait, Arkaj Kumar, S.A. Haseeb, Padmesh Kumar, Advs. & Gurmeet Singh Makker, AOR, for the Appellant
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S/Shri Arvind P. Datar, Sr Adv., Siddharth Vasudev, Ms Gayatri Gulati, Brahma Prakash Soni, Advs. & T.V.S. Raghavendra Sreyas, AOR, for the Respondent
Facts of the Case
The assessee, an air cargo agent, was engaged in booking and sale of air cargo space on behalf of airlines. In the course of its business, the assessee collected freight charges from customers, remitted the same to airlines, and retained commission for its services, on which Service Tax was duly discharged. The jurisdictional authorities took the view that the assessee was liable to pay Service Tax on the entire gross amount charged from customers, inclusive of the freight element, invoking Sections 65B(44) and 73 of the Finance Act, 1994. Contesting this demand, the assessee submitted that freight charges collected and remitted to airlines did not constitute consideration for services rendered by it, and only the commission component represented taxable value. The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) relied upon its earlier decisions in La Freight Pvt. Ltd. [2018 (3) TMI 113-CESTAT, Chennai], Skylift Cargo (P) Ltd. [2018 (2) TMI 320-CESTAT, Chennai], and Final Order No. 42113/2017, dated 18-09-2017, to uphold the assessee’s position. The matter was accordingly placed before the Supreme Court.
Supreme Court Held
The Supreme Court held that the reasoning adopted by the CESTAT in the impugned order was sound and did not warrant interference. It observed that the freight charges collected by air cargo agents on behalf of airlines and remitted to them were not liable to Service Tax in the hands of such agents, as the taxable service was confined only to the commission earned. The Court affirmed that the levy contemplated under Sections 65B(44) and 73 of the Finance Act, 1994, could not extend to amounts merely collected and passed through to airlines without forming part of the agent’s consideration. The departmental contention that the gross freight charges were includible in the taxable value was rejected. The appeal of the department was dismissed.
List of Cases Reviewed
- Pawan Cargo Forwards Pvt. Ltd. v. Principal Commissioner — 2020 (34) G.S.T.L. 559 (Tribunal) — Affirmed [Para 2]
