2015 (11) TMI 1249 - AT - Service Tax

Waiver of pre deposit - Business Support Service - Cargo handling service - transportation of export cargo from CFS to port of shipment in relation to exports - Held that - Appellants are approved by the Commerce Ministry as CFS at Tiruppur by Public Notice No.8/95 dt. 9.5.1995 as container freight terminal. Section 65 of Finance Act covers all cargo handling service of loading, unloading, packing and unpacking of cargo and includes cargo handling services provided for freight station. Section 65 (23) clearly excludes handling of export cargo or passenger baggage or mere transportation of goods. The activities relating to export cargo not chargeable to service tax. Adjudicating authority has not disputed the fact that transportation charges received by the appellant is towards transportation of export cargo from the client from CFS to port of loading. In the present case amount collected towards transportation of export cargo cannot be classifiable under BSS as the appellant is the CFS operator handling of both import and export cargo. Therefore, prima facie appellants have made out a case for total waiver of predeposit. - Stay granted.

Summary

Issues:
1. Whether the demand of service tax under Business Support Service for transportation of export cargo from CFS to port of shipment is valid.
2. Whether the activities of the appellant fall under cargo handling service or Business Support Service.
3. Whether the transportation charges for export cargo are chargeable to service tax.

Analysis:
1. The appellant, a container freight station, was demanded service tax under Business Support Service for transporting export cargo. The appellant argued that their activities are covered under cargo handling service, exempting them from service tax on export cargo transport. The appellant contended that the Finance Act excludes handling of export cargo from cargo handling service, making the activity non-taxable. The appellant also highlighted that the transportation of export cargo might fall under Goods Transport Agency (GTA) with service tax payable on a reverse charge basis by the recipient, as the appellant is a multinational company with separate CFS centers.

2. The Revenue reiterated that separate invoices for transportation and cargo handling indicated that the transportation did not fall under cargo handling service but under Business Support Service. However, the Tribunal noted that the appellant was approved as a CFS by the Commerce Ministry, and Section 65 of the Finance Act excludes handling of export cargo from cargo handling service. The Tribunal found that the transportation charges were for moving export cargo from CFS to the port, which could not be classified under Business Support Service as the appellant operated both import and export cargo handling, falling under cargo handling service. Therefore, the Tribunal held that the appellant had a prima facie case for a total waiver of predeposit, allowing the stay application and halting the recovery of the demanded amount during the appeal's pendency.

3. The judgment clarified that the appellant's activities related to export cargo were not chargeable to service tax under Business Support Service due to the exemption of handling export cargo from cargo handling services. The Tribunal's decision was based on the specific provisions of the Finance Act and the nature of the appellant's operations as a CFS operator. By analyzing the legal framework and the appellant's arguments, the Tribunal concluded that the demand for service tax on transportation of export cargo was not valid and granted relief to the appellant by waiving the predeposit and staying the recovery of the demanded amount.