The central legal point established in the judgment is the interpretation of the relevant sections of the Finance Act and the applicability of service tax on the extra charges collected, emphasizing the distinction between actual 'ocean freight' and the excess amount collected by the Assessee.

R. Banumathi, J.

1. The above appeal is filed by the Assessee against the order passed by Customs, Excise and Service Tax Appellate Tribunal, Chennai (CESTAT) in Miscellaneous Order No.403892013 dated 04.02.2013, directing the Assessee to make pre-deposit of Rs.30 lakhs as against the service tax of Rs.1,38,23,529/- and penalty of Rs.1,38,23,529/-.

2. Assessee – M/s.Leaap International Private Limited, Chennai, a Proprietorship firm is engaged in providing Custom House Agent Service, Business Auxiliary Service and Business Support Service. Assessee is registered with Service Tax Commissionerate, Chennai and their Service Tax Registration Number is AAACL1251FST001. Assessee provide cargo space already booked by them in Airlines/Ship for their clients use for export of goods. Assessee pays charges for space bookings to the respective Airlines/Steamer Agents. Whenever consignment of their customers are sent using the space booked, Assessee charge their customers freight charges for the transportation of the goods by the respective Airlines/Steamer Agents. While charging their customers towards freight charges for the cargo booked, the Assessee is said to be collecting extra charges and collect the same from their clients. The services of the Assessee are classifiable under 'Business Auxiliary Service' under the category of “procurement of goods or services which are inputs for clients” introduced with effect from 10.09.2004. Consequently, the Assessee is liable to pay service tax on the extra charges collected on the Airlines/Steamer Agents, which according to the Revenue is the consideration received for rendering the above services and will form part of the value of taxable service and liable for service tax under “Business Auxiliary Service”.

3. A Show Cause Notice No.11/2010 dated 12.01.2010 was issued by the Commissioner of Service Tax proposing to assess taxable services relating to the charges which are collected in excess of “ocean freight” of Rs.11,95,65,220/- for the period from October 2004 to December 2008 and the service tax payable is Rs.1,38,23,529/- under Business Auxiliary Service under Section 65(19((iv) read with Section 65(105)(zzb) of Finance Act. Assessee sent a detailed reply (03.01.2011) to the Show Cause Notice (12.01.2010). Objection of the Assessee was rejected and by the order dated 13.04.2011, the Commissioner of Central Excise confirmed the demand of service tax of Rs.1,38,23,529/- being the service tax on the Business Auxiliary Service rendered during the period October 2004 to December 2008 and also imposed penalty of Rs.1,38,23,529/- under Section 78 of Finance Act.

4. Being aggrieved by the order of the Commissioner, Central Excise (13.4.2011), Assessee filed appeal before CESTAT in ST/475/2011 on the ground that there is no question of any service tax and once the dispute is on legal interpretation, penalty cannot be imposed. Pending appeal, Assessee filed application for waiver of pre-deposit of tax of Rs.1,38,23,529/- imposed under Section 73(1) and also penalty of Rs.1,38,23,529/- under Section 78 of Finance Act raising the plea that they had not rendered any service “which is an input for their clients” and demand of tax under “Business Auxiliary Service” is not sustainable and that the alleged extra amount is in the nature of profit while charging their customers towards freight charges.

5. Observing that Assessee booked space for cargo for transporting their clients goods which has been utilised by the exporter/importer and prima facie case is made out that extra amount collected by the Assesse is in relation to the procurement of that service, by the order dated 04.02.2013 in Miscellaneous Order No.403892013, CESTAT directed the Assessee to pre-deposit a sum of Rs.30 lakhs within a period of six weeks and report compliance on 26.03.2013. Being aggrieved by the order of CESTAT directing the Assessee to make pre-deposit of Rs.30 lakhs, the Assessee has preferred this appeal.