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2022 (2) TMI 667 - AT - Service TaxClassification of services - Cargo Handling Service or not - classifiable under Cargo Handling Services under Section 65(105)(zr) read with Section 65(23) of the Finance Act, 1994 prior to 01.07.2012 and after 01.07.2012 under Handling of Cargo or under Goods Transport Agency under Section 65(105) (zzp) read with Section 65(50b) of the Finance Act, 1994 prior to 01.07.2012 and after 01.07.2012 under Section 65B(26) of the Finance Act, 1994? - inclusion of cost of road transportation as well as sea transportation shown separately in the invoices in the value of Cargo Handling Services - arrangement of services of Coastal Sea Transportation of Containerized Cargo and/or Handling of Cargo at load port and discharge port on payment of such amount - reimbursement of expenses - inclusion of cost or expenditure viz. payment towards transportation and handling charges incurred (after 2012-13 to 2014-15) in assessable value - invocation of extended period of limitation. HELD THAT - On plain reading of definition of Cargo Handling Service, it is clear that to classify the service under Cargo Handling Service there must be provision of services of loading, unloading and it includes handling of cargo for freight in special containers or for non containerized freight, for all mode of transport. It means service of loading, unloading and handling of cargo whether in container or otherwise may merit classification under the said category irrespective of fact of mode of transportation but by any means transportation of goods in container whether by road and/or sea cannot be classified under the Cargo Handling Service. It is a fact on record that respondent had provided services of transportation of goods by road in a container in the capacity of Goods Transport Agency and arrange services of handling of cargo at load port and dispatch port as well as sea transportation on reimbursement of amount on actual basis from recipient of services. From Board clarification No.B.11/1/2002-TRU dated 01.08.2002, it is clear that services under the category of Cargo Handling Services are those services provided by the Cargo Handling Agencies who undertake the packing, unpacking, loading and unloading of the goods meant to be transported by any means of transportation. In the instant case, it transpires from the invoice that respondent has not provided any service in the form of handling of cargo to transport goods by road and also outsourced the services of transportation of goods by sea in a vessel. In the present case, the Goods Transport Agency and/or services in relation to transport of coastal goods are more specific service therefore, import classifiable under clause (zzp) of Section 65(105)- Goods Transport Agency read with Section 65(50b) of the Finance Act, 1994 and clause (zzzzl) (zr) of Section 65 (105) Transportation of Coastal Cargo and Cargo Handling Service is general one. Therefore, services provided by respondent are rightly merit classified under GTA - It is not the case of the department that services provided by respondent cannot be classified at specific services as provided under Section 65A(2)(a) therefore, different service provided by the respondent cannot be classified as Cargo Handling Service . The respondent has provided the service of Goods Transport Agency Service during the period under dispute and also issued consignment note and not provided any sort of service as alleged of Cargo Handling Service , etc. The service is not chargeable to service tax under Cargo Handling Service . Without prejudice to the above, we also find that the show cause notice as well as impugned appeal admits that the respondent had provided services of sea transportation as well as handling of cargo at load port and dispatch port in the capacity of pure agent but had doubted about fulfillments of conditions as stipulated in Rule 5(2) of Service Tax (Determination of Value) Rules, 2006 - Only because of same containers were transported by sea in the vessel by other service provider and payment of sea transportation received by them against the invoice raised by them for reimbursement of actual basis, it cannot be said that it had not provided service of transport of goods by road. It is also not disputed that the respondent were registered as service provider under the category of Goods Transport Agency and paying service tax wherever payable by them under the Finance Act, 1994. In the registration, there is no mention of either cargo handling service or they had not provided any service of cargo handling nor transportation of goods by sea, etc. As per the undisputed fact, the service of handling containers at load ports, transportation of containers by vessel from one port of India to another port of India and handling of containers at discharge ports was done by shipping line only. The payment of sea freight handling charges as discussed in paras (Supra) on behalf of the clients to the shipping line and reimbursement on actual basis is not under dispute - For the purpose of levy of service tax there must be a provision of service for consideration, once there is no provision of service and receipt of consideration there cannot be any levy of service tax for making a payment on behalf of the client and raising invoices. Respondent has simply arranged payment on behalf of service recipient i.e. Consignor or consignee to the shipping line and taken reimbursement on actual basis from the receiver of service hence, the same cannot be considered as provision of service on consideration basis. Time Limitation - HELD THAT - There is also the issue that whether the transportation of goods involved in respect of agricultural produce and whether the same is exempted, levy of Service Tax. The respondent also made a submission on the issue of limitation submitting that there is no suppression of fact hence, the demand beyond normal period is otherwise time barred. Since we are deciding the matter on merit, we are not going into the other issue including limitation. Appeal dismissed - decided against Revenue.
Issues Involved:
1. Classification of services provided by the respondent. 2. Inclusion of transportation costs in the value of "Cargo Handling Services." 3. Consideration of the respondent as a "Pure Agent." 4. Inclusion of costs incurred as a "Pure Agent" in the value of taxable services. 5. Invocation of the extended period under Section 73 of the Finance Act, 1994. Detailed Analysis: 1. Classification of Services Provided by the Respondent: The primary issue was whether the services provided by the respondent fall under "Cargo Handling Services" or "Goods Transport Agency" (GTA) services. The adjudicating authority dropped the demand, concluding that the respondent was not involved in loading, unloading, or packing of cargo and was only providing transportation services by road and sea. The tribunal upheld this finding, stating that the essential character of the services was transportation of goods by road and sea, not cargo handling. The tribunal cited Section 65(105)(zr) and Section 65(23) of the Finance Act, 1994, and various circulars to support this classification. 2. Inclusion of Transportation Costs in the Value of "Cargo Handling Services": The tribunal examined whether the costs of road and sea transportation shown separately in invoices should be included in the value of "Cargo Handling Services." It was concluded that since the transportation costs were shown separately and the services provided were primarily transportation, these costs should not be included in the value of cargo handling services. This was supported by CBEC Circular No. B.11/1/2002-TRU dated 01.08.2002 and the tribunal's decision in United Shippers Ltd. vs. Commissioner of Central Excise, Thane-II. 3. Consideration of the Respondent as a "Pure Agent": The tribunal analyzed whether the respondent acted as a "Pure Agent" when arranging for coastal sea transportation and handling of cargo at ports, and whether such costs should be included in the taxable value. It was concluded that the respondent acted as a pure agent, fulfilling all conditions under Rule 5(2) of the Service Tax (Determination of Value) Rules, 2006. The tribunal noted that the respondent did not hold title to the services procured, did not use the services, and only received the actual amount incurred. 4. Inclusion of Costs Incurred as a "Pure Agent" in the Value of Taxable Services: The tribunal referred to Section 67 of the Finance Act, 1994, and Rule 5 of the Service Tax (Determination of Value) Rules, 2006, to conclude that costs incurred by the respondent as a pure agent should not be included in the value of taxable services. The tribunal cited the Supreme Court's decision in Intercontinental Consultants and Technocrats Pvt. Ltd. to support this conclusion. 5. Invocation of the Extended Period under Section 73 of the Finance Act, 1994: The tribunal did not delve into the issue of limitation, as the case was decided on merit. However, it was noted that there was no suppression of facts by the respondent, which would typically be a requirement for invoking the extended period. Conclusion: The tribunal upheld the adjudicating authority's order, finding no infirmity in the classification of services as GTA rather than cargo handling. The appeals filed by the revenue were dismissed, and it was concluded that the respondent acted as a pure agent, and the costs incurred in this capacity should not be included in the value of taxable services. The tribunal also noted that the demand for the period up to 31.03.2015 was not maintainable based on the Supreme Court's decision in Intercontinental Consultants and Technocrats Pvt. Ltd. The tribunal dismissed the revenue's appeals against the directors, citing the low monetary value involved.
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