By TIOL News Service

MUMBAI, OCT 14, 2014: THE applicant is engaged in the activity of providing courier service and the same is provided in the following manners:-

(a) The applicant collects cargo from the clients located in India and delivered them outside of India. The clients are paying courier charges invoiced by the applicant in India. The applicant is also paying service tax on these charges. After delivering the courier outside India, they are getting certain amount. Revenue has demanded the service tax on the amount paid by the foreign entity to the appellant under courier service/under reverse charge mechanism.

(b) Client located in India deliver courier to the applicant to deliver outside India and not paying courier charges to the applicant but the courier charges paid by the recipient of the courier outside India. The foreign entity of the applicant is collecting courier from the applicant and sent to the foreign recipient on payment of courier charges. The applicant receives certain amount from their foreign entity towards rendering of services to collect courier and deliver it at port from the client. Revenue is of the view that on this activity the applicant is required to pay service tax under the category of courier service.

(c) The foreign entity is receiving courier to be delivered in India and the said courier on receipt of the same in India, the applicant is delivering the courier as directed by their foreign entity. Revenue was of the view that in this case, as service recipient is located in India and service is performed in India therefore, the applicant is required to pay service tax on the charges received from the foreign entity towards performing of this service.

A total service tax of Rs.67,89,17,207/- on the aforesaid alleged ‘taxable services' has been confirmed against the applicant along with interest by invoking extended period of limitation. Penalties are also imposed.

The applicant is before the CESTAT seeking waiver of pre-deposit of the adjudged dues.

The Bench after hearing both sides and considering the submissions observed -

++ For Courier received in India, the remuneration towards service rendered received in India and they are paying the service tax on whole of the amount. Therefore, whatever amount they paid to the foreign entity, the applicant is not required to pay service tax.

++ When foreign entity is receiving courier to be delivered in India and the same has been given to the applicant to deliver in India. In that case, we are of the view that the service although performed in India but rendered to foreign entity therefore, relying on the decision in the case of Paul Merchants, v. CCE - 2012-TIOL-1877-CESTAT-DEL. Prima facie we are of the view that on this activity, the applicant is not required to pay the service tax and;

++ The applicant is receiving courier in India whereas the remuneration towards the service provided were received outside India. For this activity, the applicant is required to pay the service tax as service recipient is located in India and the service has been provided in India by the applicant. Therefore, prima facie we are of the view that the applicant has failed to make out a case for 100% waiver of pre deposit.

The Bench directed the applicant to make a pre-deposit of Rs.6 crore and report compliance for obtaining a stay in the matter.

(See 2014-TIOL-1986-CESTAT-MUM)