2018 (1) TMI 169 - AT - Service Tax

Port services - CHA service - Business Auxiliary Services - Held that - the respondents are not engaged in port services. Further, the first issue they are not engaged in providing any service to the shipper by paying wharfage charges on actual basis. These are port charges and are getting reimbursed on actual basis from shipper lines. In any case, these charges are typically port services for which CHA is not authorized or involved - demand upheld. Valuation - Crane hire charges - Held that - hire charges are paid by the appellant on actual basis and reimbursed from the shipping lines - There is no element of services to the shipping lines as there is no payment over and above the reimbursable charges, which can be attributed to any taxable service. Business Auxiliary services - Held that - the Tribunal in the case of Bhuvaneswari Agencies Pvt. Ltd. Vs. CCE, Bangalore 2007 (7) TMI 665 - CESTAT BANGALORE , held that the activity of rendering services of arranging shipment of export cargo and negotiating the same with shipping lines on behalf of the clients will not fall under tax liability. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Taxability of amount received by the respondents under CHA service, Port service, and BAS.
2. Whether wharfage charges, intercarting services, and crane hiring charges are taxable under CHA service or Port services.
3. Taxability of incentive income earned by the respondents under BAS.

Analysis:

Issue 1:
The dispute revolved around the taxability of certain amounts received by the respondents under different services. The Revenue contended that these amounts were liable to tax under CHA service, Port service, and BAS. The impugned order favored the respondents, except for upholding a service tax demand towards Foreign Exchange receipts, which the respondents had already paid.

Issue 2:
Regarding the first issue, the respondents, a Custom House Agent (CHA), were not engaged in providing port services. The charges collected by them from shippers were not wharfage charges but port charges reimbursed on an actual basis. The legal provision was correctly interpreted in the impugned order, aligning with the decision of the Hon'ble Karnataka High Court, which clarified that handling export cargo does not attract service tax under port services.

Issue 3:
On the second issue of crane hire charges and tax liability under BAS, it was established that the charges were reimbursed from shipping lines without any additional payment, indicating no taxable service element. Citing a previous Tribunal case, it was clarified that arranging shipment of export cargo and receiving amounts from shipping lines did not constitute a taxable service under BAS. The absence of promotion or marketing services in this arrangement further supported the non-taxability under BAS.

In conclusion, after thorough analysis and consideration of legal precedents, the Appellate Tribunal dismissed the Revenue's appeal, finding no grounds to interfere with the impugned order. The judgment provided clarity on the taxability of specific services and upheld the decision in favor of the respondents based on the legal interpretations and factual circumstances presented during the proceedings.