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2017 (4) TMI 556 - AT - Service TaxClassification of service - CHA services or C&F services - Demand of tax under reverse charge mechanism - CHA invoice shows the nomenclature Clearing and Forwarding Division below its name - Held that - the services rendered by M/s. United Liner Agencies of India Pvt. Ltd. is a CHA service and not a Clearing and Forwarding Agency Service. Although the nomenclature used by the service provider is Clearing and Forwarding Agent but the services rendered by the said agent is in the nature of services rendered by CHA and he has registered with the Customs Department as CHA. In view of these facts, we hold that the appellants are not liable to pay the service tax as they have already paid the same to the CHA who in turn has paid to the Government and the appellants are not liable to pay the service tax on reverse charge mechanism. - Demand set aside - Decided in favor of assessee.
Issues:
Classification of services as CHA service or Clearing and Forwarding Agency Service for service tax liability. Analysis: The case involved a dispute regarding the classification of services provided by a Customs House Agent (CHA) as either CHA service or Clearing and Forwarding Agency Service for the purpose of service tax liability. The appellant, engaged in the manufacture of Ferro Silicon and Silico Manganese, utilized the services of M/s. United Liner Agencies of India Pvt. Ltd., a licensed CHA, for handling export procedures. The Customs documents clearly indicated the involvement of the CHA in the export process. The dispute arose when a show cause notice proposed service tax on payments made to the CHA, based on the proviso to Section 68(1) of the Finance Act, 1994. The appellant contended that the services provided were only CHA services and not Clearing and Forwarding Agency services. The appellant cited legal precedents where it was established that for services to be classified as Clearing and Forwarding Agency Service, both clearing and forwarding activities must be undertaken by the service provider. In this case, the CHA only handled goods inside the Port and did not participate in clearing the goods from the factory to the Port. The CHA was registered under the CHA category, as evidenced by their Service Tax Registration No. mentioned in the invoice. The CHA had charged and paid service tax to the Government, and since CHA services did not fall under the reverse charge mechanism, the appellant argued that the service tax demand was unfounded. The Commissioner and the learned AR argued that the services provided by the CHA should be classified as Clearing and Forwarding Agency Service. However, after considering the submissions of both parties and reviewing the material, the Tribunal held that the services rendered by the CHA were indeed CHA services and not Clearing and Forwarding Agency services. Despite the nomenclature used by the service provider, the nature of services provided aligned more with CHA services, as the CHA was registered with the Customs Department as a CHA. Therefore, the Tribunal concluded that the appellant was not liable to pay the service tax, as they had already paid it to the CHA, who in turn had remitted it to the Government. The Tribunal set aside the impugned order, thereby allowing the appeal of the assessee. In conclusion, the judgment clarified the distinction between CHA services and Clearing and Forwarding Agency services for the purpose of service tax liability, emphasizing the actual nature of services provided by the CHA in determining the tax liability.
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