2017 (6) TMI 820 - AT - Service Tax

Cargo Handling Service - demand - extended period of limitation - Held that - if the goods are transported by road and loading-unloading has been done by the assessee, the same is covered under GTA service as clarified by CBEC Circular No. 104/07/2008-ST dated 06 Aug 2008 and Circular No. 186/5/2015-ST dated 05.10.2015 - The said circulars also clarifies that if the main service is Cargo Handling service, in that circumstances the service tax has to be demanded under the category of Cargo Handling services. Admittedly, the appellant has shown three invoices for handling charges which is recovered by them from the service recipient. In that circumstance, we hold that appellant is liable to pay service tax for these three invoices. Penalty u/s 78 - Held that - It is clarified that if the appellant pays whole of service tax amount along with interest and 25% of service tax as penalty, within 30 days from the date of recipient of this order, the penalty shall be reduced to 25% of the amount of service tax. Appeal allowed - decided partly in favor of assessee.

Summary

Issues:
Appeal against demand of service tax under "Cargo Handling Service" for 2003-04 and 2004-05.
Classification of activities as GTA services.
Applicability of extended period of limitation for invoking show cause notice.
Interpretation of invoices showing handling charges.
Penalty under Section 78 of the Finance Act, 1994.

Analysis:

1. The appellant contested the demand of service tax under the category of "Cargo Handling Service" for the years 2003-04 and 2004-05. The Revenue asserted that the appellant, involved in transporting molasses from sugar mills to distilleries, was handling cargo, leading to the initiation of proceedings for service tax recovery. The appellant argued that the activities were classifiable under GTA services, citing relevant CBEC Circulars. Additionally, the appellant highlighted that only three invoices were issued for handling charges, suggesting liability for service tax only on those invoices.

2. The appellant further contended that the extended period of limitation should not be invoked since the department was aware of the transportation activities. On the contrary, the Revenue supported the adjudication order, emphasizing that the invoices indicated handling charges falling under Cargo Handling service. Following the submissions, the Tribunal examined the issue, acknowledging that if goods are transported by road with loading-unloading performed by the assessee, it falls under GTA service. The Tribunal upheld the demand for service tax on the three specific invoices, imposing penalties under Section 78 of the Finance Act, 1994.

3. The Tribunal clarified that the appellant must pay the service tax amount, interest, and 25% of the service tax as penalty within 30 days of the order receipt to reduce the penalty to 25% of the service tax amount. Failure to comply would result in a penalty equivalent to the service tax demanded in the order. Ultimately, the appeal was disposed of with the specified terms, emphasizing the liability of the appellant for the service tax, interest, and penalties as per the Tribunal's decision.