2013 (11) TMI 712 - AT - Service Tax

Valuation - inclusion of reimbursement of expenses - Storage & Warehousing - Cargo Handling Services - CBE & C vide Circular no. B-11/1/2002-TRU - Held that - In case where the Cargo Handling Service and transportation services are rendered, and if in the bills raised for the services rendered, transportation is shown separately (on actual basis, verifiable by documentary evidence), the tax would be leviable only on the Cargo Handling Charges. This clarification issued by the Board applies even to the facts of the present appeal. Since the appellant has discharged the Service Tax liability on both these services, the question of leviability of Service Tax on whole amount under one taxable service of Cargo Handling is not sustainable in law - Decided in favour of assessee.

Summary

Issues:
Service Tax liability on handling charges and transportation charges shown separately in invoices.

Analysis:
The appeal was directed against an Order-in-Original passed by the Commissioner of Central Excise, Raigad, concerning the appellant, a company running a Container Freight Station in Navi Mumbai. The appellant was registered for taxable services of 'Storage & Warehousing' and 'Cargo Handling Services'. The dispute arose regarding the treatment of handling charges and transportation charges separately shown in the invoices. The department demanded Service Tax on the entire amount received by treating the transactions as one taxable service under 'Cargo Handling Services'. The appellant argued that these were distinct services, and they had discharged the Service Tax liability separately on each. The adjudicating authority upheld the demand, leading to the appeal.

The appellant contended that handling of containers and movement of containers to and from the Port were two separate transactions. They had discharged Service Tax under 'Cargo Handling Services' for handling charges and under GTA services for transportation charges. The appellant cited a previous Tribunal decision in their favor, emphasizing that if charges were shown separately in invoices, Service Tax liability should only apply to the relevant service. The appellant had already paid Service Tax on both services, and hence, combining them for taxation was not valid.

The Additional Commissioner for the Revenue reiterated the adjudicating authority's stance during the proceedings. However, the Tribunal analyzed the submissions from both sides and referred to a Circular by the Central Board of Excise & Customs. The Circular clarified that if transportation services were shown separately in invoices along with Cargo Handling Services, tax would be levied only on the Cargo Handling Charges. The Tribunal found that the appellant had already discharged the Service Tax liability on both services separately, aligning with the legal provisions and Circular. Consequently, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing the distinct nature of the handling and transportation services, which were correctly taxed separately as per the Circular and legal provisions. The decision highlighted the importance of showing charges separately in invoices to determine the appropriate Service Tax liability for each service provided.