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2018 (10) TMI 36 - AT - Service TaxBusiness Auxiliary Services (BAS) / Business Support Service (BSS) - appellants were engaged in Courier activity, later on investigation it emerged that they were collecting certain charges as crossing over charges , raised on their sub-franchisee agencies located in other parts of Tamil Nadu for the purpose of enabling further movement of documents, which originated from their sub-franchisees end. Held that - It is but evident that the various franchisees spread over Tamil Nadu and the assessees based in Chennai, are operating in the hub-and-spoke business model. The documents from each of these TPC franchisees may be sent to the TPC hub at Chennai wherefrom they will be further sent onwards to various other TPC hubs in other parts of the country for further distribution. This being the case, crossing over charges are being collected only for the intra-movement of courier packages within the hub-and- spoke arrangement, namely with the TPC network in Tamil Nadu. In the present case the impugned services within the TPC network is nothing but a continuation or culmination of courier services only. It then cannot be alleged that TPC receiving or giving of services within its own network of the assessee will render them liable to service tax levy. Appeal allowed - decided in favor of appellant.
Issues:
1. Demand of service tax liability on crossing over charges under Business Auxiliary Services (BAS) and Business Support Service (BSS). 2. Imposition of penalties under Section 77 and Section 78 of the Finance Act, 1994. 3. Applicability of Board Circular dated 01.11.1996. 4. Barred by Limitation. 5. Activity of assessee similar to co-loader. 6. Service tax liability on the activity within the TPC network. Analysis: Issue 1: Demand of service tax liability on crossing over charges under BAS and BSS The appellate tribunal reviewed the case where the department issued a show cause notice proposing service tax liability on crossing over charges collected by the assessee. The original authority confirmed the demand under BAS and BSS with penalties. On appeal, the Commissioner set aside the demand under BAS prior to 1.5.2006 but upheld it under BSS. The tribunal considered arguments that the activity was a continuous service of courier within the TPC network, involving no third-party service. It concluded that the charges were for intra-movement within the network and not a separate service, thus setting aside the demand under BSS. Issue 2: Imposition of penalties under Section 77 and Section 78 The penalties imposed under Section 77 and Section 78 were set aside by the lower appellate authority. The tribunal upheld this decision, finding that the penalties were not sustainable given the nature of the service provided within the TPC network. Issue 3: Applicability of Board Circular dated 01.11.1996 The tribunal examined the relevance of the Board Circular dated 01.11.1996, which clarified service tax liability for co-loaders. It determined that the circular did not apply to the case at hand, as the charges collected were for services within the TPC network and not as co-loaders. Issue 4: Barred by Limitation The tribunal considered the argument that the demand was barred by limitation. However, it did not provide detailed analysis or ruling on this issue in the judgment. Issue 5: Activity of assessee similar to co-loader The tribunal rejected the argument that the activity of the assessee was similar to that of a co-loader as defined in the Board Circular. It clarified that the nature of services provided within the TPC network did not align with the concept of co-loading as per the Circular. Issue 6: Service tax liability on the activity within the TPC network Ultimately, the tribunal concluded that the services provided within the TPC network did not constitute separate taxable services under BAS or BSS. It determined that the charges collected were part of the courier service within the network and not subject to service tax liability. As a result, the assessee's appeal was allowed, and the department's appeal was dismissed. This detailed analysis of the judgment provides insights into the tribunal's reasoning and decision-making process on each issue raised in the case.
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