Demurrage charges not taxable service

The Hyderabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that demurrage charges paid to foreign vessel owners for delay in loading or unloading cargo and dispatch money received for early turnaround of vessels do not constitute consideration for any taxable service and therefore cannot be subjected to service tax. 

The Tribunal further held that where a foreign service provider maintains a registered establishment in India that has discharged service tax on consulting engineering services, the recipient cannot again be subjected to service tax under the reverse charge mechanism.