Freight forwarders acting as agents of airlines are liable to pay service tax
Freight forwarders who act as agents or intermediaries of airlines or ocean-liners for transportation of goods outside India are liable to pay service tax. However the freight forwarders who are engaged in overseas transportation of goods on their account and bear all risks fall outside liability of Service Tax.
The logic behind is that when the freight forwarder acts as an agent of airlines or carrier or ocean-liner, the service of transportation is provided by the airline/carrier/ocean-liner and the freight forwarder is merely an agent of such airline/carrier etc.
The freight forwarder who themselves provide overseas transportation services and bear all related risks will not be liable to pay service tax when the destination of the goods is from a place in India to place outside India. The place of provision of the service of transportation of goods by air/sea, other than mail or courier, is the destination of the goods. So, when goods are transported overseas, the place of provision of service falls outside the taxable territory and hence the service is not taxable.