Service Tax on Ship-broking Activity – CBEC Clarifies
Interocean Shipping (India) Pvt. Ltd., had sought clarification from the Board on leviability of service tax on ship broking activity.
The CBEC observes that,
1. The ship broker ensures that the conditions of the contracts are adhered to.
2. They also follow up the movement of goods and freight payment till the cargo reaches its destination.
3. Hence, the activities undertaken by ship brokers are nothing but provision of services on behalf of client for a consideration akin to that of a commission agent.
4. The ship broker is acting on behalf of shipping lines/ship owner and causes provisions of services, for a consideration.
5. The activities of ship broker are akin to a commission agent.
6. Ship brokers not only provide services on behalf of shipping line/ship owner and charterer but also deal with the goods i.e. cargo.
7. This is clearly evident from the fact that it monitors the cargo movement till it reaches the destination.
8. Ship broker also ensures that freight is paid after cargo reaches the destination.
9. Hence the activities undertaken by ship broker are of commission agent and leviable to service tax under Business Auxiliary Service (BAS) of section 65 (105) ( zzb ) of the Finance Act, 1994.
The Board clarifies that the service rendered by ship broker is leviable to service tax under business auxiliary service.
And as usual with all important clarifications from the Board, this is also contained in a private letter to the Company with copies to the CCs and Commissioners and the DGST, but not for the GENERAL PUBLIC.
CBEC's F.No.332 /41/2008- TRU Dated: December 19, 2008