Case nº Ruling No. AAR/ST-1/23/2016 in Application No. AAR/44/ST-1/1/2015 of AAR Cases, July 22, 2016 (case In Re : Global Transportation Services Pvt. Ltd. Vs)

Judge:For Appellant: Shri V. Sridharan, Advocate and For Respondents: Shri Amresh Jain, Authorised Representative (AR)
President:V.S. Sirpurkar, Chairman, Shri S.S. Rana and R.S. Shukla, Members
Defense:Finance Act, 1994 - Section 73
Resolution Date:July 22, 2016
Issuing Organization:AAR Cases
 
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Court Information AAR Cases
Citation 2016 (45) STR 574 (AAR)
Judgment Date 22-Jul-2016
Party Details In Re : Global Transportation Services Pvt. Ltd. Vs 
Case No Ruling No. AAR/ST-1/23/2016 in Application No. AAR/44/ST-1/1/2015
Judges V.S. Sirpurkar, Chairman, Shri S.S. Rana and R.S. Shukla, Members
Advocates For Appellant: Shri V. Sridharan, Advocate and For Respondents: Shri Amresh Jain, Authorised Representative (AR)
Acts Finance Act, 1994 - Section 73

Ruling:

1. M/s. Global Transportation Services Private Limited (herein-after also referred to as applicant seeks to provide logistics solutions to its customers, comprising of number of services, which are mutually exclusive and can be provided on a standalone basis. The applicant will sell and bill the customer separately for each of the service availed. For rendition of such services, applicant seeks to enter into service agreements with various service providers on a principal to principal basis and not as an agent of its customer. Applicant submits that in his proposed business model, the various stages of consignment shall be distributed inter se services providers in the following manner:

Outbound Shipments

Stage

Service provider engaged by the applicant

Local Transportation in India by road

Goods Transport Agency

Loading/Unloading in India

Applicant

Customs Clearance in India

Customs House Agent

Air/Ocean Freight

IATA Member Airline

Loading/Unloading abroad

Freight Partner

Customs Clearance abroad

Freight Partner

Local Transportation abroad

Freight Partner

Inbound Shipments

Stage

Service provider engaged by the applicant

Local Transportation abroad

Freight Partner

Loading/Unloading abroad

Freight Partner

Customs Clearance abroad

Freight Partner

Air/Ocean Freight

Freight Partner

Loading/Unloading in India

Applicant

Customs Clearance in India

Customs House Agent

Local Transportation in India by road

Goods Transport Agency

  1. Applicant shall contract with an IATA member airline for transportation of consignment; the airline shall issue an Airway Bill (Awb) to the applicant. Awb shall govern the terms of contract for transportation of cargo between the airline and the applicant on a principal to principal basis. Further, applicant shall not contract with the airline as an agent of its customer. Instead, the Awb shall lay down the terms and conditions assumed by the airline and the applicant on their own account. Therefore, in case the cargo consignment is damaged during the transportation, the applicant shall have an independent right against the carrier to recover damages in accordance with the Carriage Act and the Montreal Convention. In majority of the cases, applicant as the carrier shall further issue a House Airways Bill (''House Awb'') upon its customer, i.e., the original consignor, as the shipper. The applicant''s customer shall have independent access to contractual remedies and rights available under the Carriage Act and the Montreal Convention against the applicant.

  2. Applicant shall also, inter alia, enter into reciprocal freight business arrangements with freight forwarders in other jurisdictions to conduct loading, unloading, customers clearance, local transportation at destination (''Freight Partner''). Following are notable terms of the applicant with Freight Partner:

    i. Each party shall render services in relation to freight forwarding business to other party to and from their respective territories as non-exclusive service providers;

    ii. Each party shall act as a service provider to the other in their respective territories and provide such pick-up and delivery services as agreed from time to time;

    iii. That contractual relations between the applicant and Freight Partner shall be on principal to principal basis and service rates shall be determined on arm''s length basis;

    iv. The applicant shall invoice Freight Partner for delivery of consignment in India and vice versa;

    v. Applicant shall intimate the Freight Partner of the port of delivery and the delivery address and the Freight Partner shall undertake to effectuate actual delivery, including complying with customs and statutory formalities in the particular jurisdiction for clearance of the consignment and vice versa;

    vi. The Freight Partner may engage the services of other service providers in rendition of freight forwarding services to the applicant and vice versa.

  3. Applicant further submits that they shall determine its fees for rendition of services based on the customer''s requisition on a case...

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