CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL CHENNAI REGIONAL BENCH – COURT NO. I Service Tax Appeal No.41677 of 2016 (Arising out of Order-in-Appeal No.253/2016 (STA-I), dated 27.04.2016 passed by Commissioner of Service Tax (Appeals-I), Newry Towers, 2054/1, II Avenue, 12^th Main Road, Chennai 600 040)

M/s. North Star Shipping Service Pvt. Ltd., …. Appellant No.18, Old No.891 Jaffer Saramg Street Mannady, Chennai 600 001 VERSUS Commissioner of GST & Central Excise … Respondent Chennai North Commissionerate

29/1, Mahatma Gandhi Road Nungambakkam, Chennai – 600 034 APPEARANCE:

For the Appellant : Ms. Radhika Chandra Sekhar, Advocate For the Respondent : Ms. G. Krupa, Authorised Representative CORAM :

HON’BLE MR. M. AJIT KUMAR, MEMBER (TECHNICAL)

HON’BLE MR. AJAYAN T.V, MEMBER (JUDICIAL)

FINAL ORDER No.40544/2026 DATE OF HEARING: 20.01.2026 DATE OF DECISION: 28.04.2026 Per AJAYAN T.V.

The appellant, North Star Shipping Services Pvt.

Ltd., is challenging the Order-in-Appeal No.253/2016 (STA-I) dated 27.04.2016 (impugned order), whereby the Appellate Authority has rejected the Appeal and upheld the Order in Original of the Adjudicating Authority.

2. Brief facts as culled out from the appeal records are that the appellant is registered as a service provider of Custom House Agent’s service. In pursuance of earlier investigation into the receipts/income of the appellant that were not included in the taxable value, show cause notice was issued covering the period up to 31.03.2005. Thereafter, pursuant to the Department calling for, inter-alia, appellant’s balance sheet, P & L account and schedules vide letter dated 10.06.2008, the appellant vide letter dated 01.07.2008 provided the same. The Department was of the view that CBEC circular dated 06.06.1997 communicated vide Chennai Central Excise Commissionerate Trade Notice No.9/97 dated 09.06.97 excludes expenses such as statutory levies and various reimbursable charges, incurred by the CHA on behalf of the client from the taxable value. Therefore, as a corollary, those amounts recovered from the client on account of reimbursable expenses but not actually incurred either fully or partly by the CHA cannot be excluded from the gross amount computed from the taxable value. Further, Department was of the view that consequent to the notification of the Service Tax (Determination of Value) Rules, 2006, in terms of Rule 5(2) expenditure or costs incurred by the service provider as a pure agent of the recipient of the service in conformity with the definition of ‘pure agent’ contained in the Explanation 1 appended thereto, shall only be excluded subject to satisfaction of the conditions stipulated therein. Conversely, the amount recovered from the recipient of the service and above the actual expenses incurred cannot be deducted from the gross amount computed as taxable value and such amount form part of the consideration received by the CHA for rendering taxable service. On scrutiny of the appellant’s balance sheet, P & L account and schedules, it was seen that the appellant had not discharged service tax on certain surplus income towards clearing and forwarding, due agent charges, documentation, incentives and commission and brokerage. It also appeared to the Department that the appellant had eared commission on Airfreight as an ITAT accredited cargo agent and also had received incentive from steamer agents/shipping lines for referring exporters which are taxable under the category of business auxiliary service. The Department therefore issued an SCN dated 30-06-2009 for the period 2005-06, 2006-07 and 2007-08 alleging that the non-inclusion of the receipts/income in the determination of taxable value as declared in the ST-3 returns was in contravention of Section 67 of the Finance Act, 1994 (Act) as amended read with the Board’s Circular for the material period and Rule 5(2) of the Service Tax (Determination of Value) Rules, 2006 and therefore the appellant had failed to discharge the appropr