2019 (10) TMI 98 - AT - Service Tax

Classification of services - Cargo Handling Service or not - activity of loading, transport and unloading of cargo through road, Rail (containers), Road-cum-Rail to different service receivers under composite contracts - CBEC vide circular F.No. B.11/1/2002-TRU, dated 01.08.2002 - HELD THAT - From the definition of Cargo Handling Services what emerges is that mere transportation of cargo is excluded and there is no doubt that a freight activity of service of transportation of goods will surely be included some manner of loading and unloading of goods. It is found that the assessee themselves do not carry out the activities of loading and unloading per se which are claimed to be carried out by independent contractors. In the present case, it is found that the contracts apparently did not have significant component of Cargo handling other than transportation though a small component of loading and unloading cannot be ruled out. But, however, no separate activity of cargo handling is mentioned nor the rate specified and even the invoices placed on record do not specifically charge for cargo handling nor for loading and unloading. The cargo handling activity alleged by the Revenue is perhaps incidental to the activity of transportation and Revenue s attempt to convert such activities into cargo handling service is too far fetching. The services provided by the appellant cannot be brought under the purview of cargo handling services. The allegation against the assessee on this score cannot sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
The issue involves determining whether the appellant, registered for various services including Business Auxiliary Service, Goods Transport Agency Service, Railway Containerised Freight Service, and Cargo Handling Service, is liable to pay service tax for the period 2004-05 to 2008-09 based on the Revenue's contention that the appellant is engaged in cargo handling activities.

Analysis:

1. Allegation of Cargo Handling Service:
The Revenue issued a show cause notice proposing a demand for service tax from the appellant for engaging in loading, transport, and unloading of cargo through composite contracts. The original authority upheld part of the demand, charging interest and penalty. The appellant contested the allegation, stating they primarily provide transportation services and do not separately charge for loading and unloading.

2. Legal Definitions and Circulars:
Section 65(23) defines "Cargo Handling Service" to include loading, unloading, packing, or unpacking of cargo. Circulars by CBEC clarify that if a lump sum is charged for transportation and cargo handling, tax is levied on the entire amount. However, if charges are separate, tax is only on cargo handling. The appellant argued that they provide transportation services, not cargo handling, supported by contracts and invoices.

3. Interpretation of Services:
The Tribunal noted that transportation activities inherently involve some loading and unloading. The Board's circulars emphasized that ancillary services like loading/unloading are part of the main service of transportation. The Tribunal found no separate charges for cargo handling in the appellant's contracts or invoices, indicating that loading/unloading activities were incidental to transportation.

4. Conclusion and Decision:
After analyzing the CBEC clarifications and the facts, the Tribunal concluded that the appellant's services did not fall under cargo handling services. The allegation by the Revenue was considered unfounded as the loading and unloading activities were integral to transportation, not separate cargo handling. Consequently, the impugned order was set aside, and the appeal by the appellant was allowed with any consequential benefits as per the law.

In summary, the Tribunal ruled in favor of the appellant, determining that their services did not constitute cargo handling services, as alleged by the Revenue. The decision was based on a detailed analysis of legal definitions, circulars, and the nature of the appellant's contracts and invoices, which indicated that loading and unloading were part of their transportation services, not separate cargo handling activities.