2019 (2) TMI 574 - AT - Service Tax

Valuation - Cargo Handling Services - inclusion of additional amount which they have collected for loading urea rakes at Marripalem siding in assessable value - Held that - Although the initial correspondence between the appellant and their client was only towards additional transportation costs but final agreement signed between the parties in the meeting as well as the subsequent invoices covered this amount towards transportation as well as other expenses incurred in loading of rakes at the new siding - it cannot be agreed by the appellant that the additional expenditure is only towards transportation and hence not liable to be charged to service tax. There are no force in their argument that they were under the bona fide belief that this amount was paid separately only towards transportation and hence not taxable because the agreement signed by the appellant and the invoices raised by them clearly indicate otherwise - the demand of service tax along with interest and penalties imposed in the impugned order are sustainable - appeal dismissed - decided against appellant.

Summary

Issues:
Dispute over additional amount charged for loading urea rakes at a different siding in the context of cargo handling service.

Detailed Analysis:
1. Issue of Additional Charges: The appellant, engaged in cargo handling service, charged an additional amount for loading urea rakes at a different siding. The department contended that this amount constituted additional consideration for the service and should be taxed. The appellant argued that the amount was solely for transportation and not part of cargo handling service.

2. Legal Proceedings: A show cause notice was issued demanding the differential duty, interest, and penalties. The lower authority confirmed the demand and imposed a penalty under Sec.78 of the Finance Act, 1994. The appellant appealed to the first appellate authority, which upheld the decision, leading to the current appeal.

3. Arguments: The appellant's counsel maintained that the additional charges were for transportation only and should not be considered as service charges for cargo handling. The departmental representative pointed to correspondence and bills indicating that the entire service provided was cargo handling, including transportation, and the additional amount was justified.

4. Judgment: The tribunal examined the initial correspondence and subsequent agreements between the parties. While the initial discussions referred to additional transportation costs, the final agreement and invoices included expenses for loading rakes at the new siding. The tribunal concluded that the additional amount was not solely for transportation but also covered other expenses related to cargo handling. The tribunal rejected the appellant's argument that they believed the amount was only for transportation, as the agreement and invoices clearly indicated otherwise.

5. Decision: The tribunal upheld the impugned order, rejecting the appeal and confirming the demand for service tax, interest, and penalties. The tribunal found no merit in the appellant's argument and deemed the impugned order to be valid and sustainable based on the evidence presented.

In conclusion, the tribunal's decision emphasized the importance of examining the complete agreement and invoices to determine the nature of additional charges in the context of cargo handling services, ultimately ruling in favor of taxing the additional amount charged by the appellant.