2014 (10) TMI 282 - AT - Service Tax

Valuation of service - Inclusion of loading and unloading charges - C&F Agent service - Held that - Respondents are paying Service Tax as C&F Agent service as per the terms and conditions of the agreement. The respondents are paying Service Tax on C&F Agent service as fixed in the agreement i.e. ₹ 14 PMT. As per the agreement the respondents are to arrange labours for loading and unloading on behalf of the company. By doing so, the respondents were receiving the actual charges for loading and unloading which was given to the Mathadi Board. We have gone through the terms and conditions of the agreement. As per clause 17 of the agreement as reproduced in the adjudication order where the respondents are to carry out the responsibilities and duties on behalf of the company to arrange for loading and unloading of the cement. In view of the terms and conditions of the agreement, we find that the respondents as C&F Agent are getting a fixed amount on which Service Tax has been paid. Loading and unloading is arranged on behalf of the company and the respondents were not retained any amount in respect of loading and unloading. - Decided against Revenue.

Summary

Issues:
Appeal against dropping of demand for Service Tax on loading/unloading charges.

Analysis:
The appeal was filed by the Revenue against the dropping of the demand for Service Tax on loading/unloading charges by the Commissioner (Appeals). The case involved an agreement between the respondents and a cement company for providing clearing and forwarding services. The Revenue contended that loading and unloading charges should be added to the assessable value for Service Tax as they are integral to the C&F Agent service provided by the respondents. The adjudicating authority upheld the demand, but the Commissioner (Appeals) set aside the order, allowing the appeal filed by the respondents.

The Revenue argued that the respondents, acting as C&F agents, performed various services such as receiving goods, warehousing, arranging dispatch, transportation, and maintaining records. They claimed that loading and unloading were essential parts of the C&F Agent service and should be included in the assessable value for Service Tax. On the other hand, the respondents relied on the agreement terms, which fixed a rate for C&F Agent services and specified that loading and unloading charges were separate and paid directly to labor boards and transporters.

The Tribunal examined the agreement terms and found that the respondents were paying Service Tax based on the fixed rate specified in the agreement. The agreement obligated the respondents to arrange for loading and unloading on behalf of the company, with charges paid directly to labor boards. The Tribunal concluded that since the respondents were not retaining any amount for loading and unloading and were paying Service Tax on the fixed rate, the loading and unloading charges should not be added to the assessable value for Service Tax.

The Tribunal dismissed the appeal filed by the Revenue and disposed of the cross-objection filed by the respondents in support of the impugned order. The judgment clarified the application of Service Tax in the context of C&F Agent services and loading/unloading charges, emphasizing the importance of agreement terms in determining tax liabilities.