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2023 (6) TMI 703 - AT - Service TaxClassification of services - services rendered by the appellant are that of a co-loader / courier agency - to be classified under support services of business or commerce or otherwise? - principal courier/s have discharged the Service Tax on the portion sub-contracted to the appellant or not - services rendered by the appellant could be treated as export of service or not - Extended period of limitation. HELD THAT - The appellant has placed reliance on the Board Circular F. No.341/43/96-TRU dated 31.10.1996 to argue that their services are to be classified as a co-loader to other couriers and since the principal courier has discharged the Service Tax and the charges are collected from their customers, the co-loaders are not required to pay any Service Tax and this was the argument they put forth before the Tribunal in the first round of litigation, who had directed the adjudicating authority to examine the party s claim relating to the charge of Service Tax on the sub-contracted portion in de novo proceedings. Whereas in the present proceedings, the appellant has taken a contrary stand stating that all the couriers were exported and delivered on cash on delivery (COD) basis and their services are required to be treated as export of service - A perusal of the above Circular reveals that the co-loader activities are not chargeable to Service Tax only on the condition that the principal courier discharges the Service Tax on the courier charges collected from their customers. Though the appellant has taken the plea initially that they were acting as a co-loader to other courier agencies who discharged Service Tax, but in the de novo proceedings it was submitted by the appellant that the courier parcels were exported abroad and as such, no tax is payable; whereas the contention of the Revenue is that the services were rendered to service recipients located in India, the service charges were received in Rupees, the conditions for treating the services as export of services were not satisfied and so, the tax liability needs to be fastened on to the appellant. The appellant has entered into an agreement, which is termed as Expense Reimbursement Agreement , with M/s. EZ Worldwide Express, New Jersey, USA. In terms of the above agreement, the appellant would be reimbursed all reasonable out of pocket expenses incurred by the dispatcher of documents in connection with the collection and dispatch of documents from the various clients of the company located in India. It has also been stated therein that since it is only a reimbursement of expenses incurred in connection with the service, there is no Service Tax or Tax Deduction at Source on the said expenses. Nothing has been brought on record relating to the rendering of any service or receipt of payment from M/s. EZ Worldwide Express. Though an agreement has been entered into between M/s. U.B. Xpress (South) Pvt. Ltd. (the appellant herein) and the overseas courier company M/s. EZ Worldwide Express, New Jersey, the appellant has failed to produce any record relating to the transactions and so, the purpose of bringing this agreement on record is not clearly understood. On the issue of classification of the services rendered by the appellant, the finding of the learned adjudicating authority is correct and in accordance with the statutory provisions. Whatever the evidence placed on record indicate that the appellant has rendered services to other courier agencies and was not involved in the in-transit movement of courier parcels to be called a co-loader . According to the appellant, courier parcels were collected from various customers in its jurisdiction which were reportedly sent abroad through M/s. United Business Xpress India Pvt. Ltd., New Delhi. It is not possible, in the absence of any documentary evidence i.e., any agreement / contract / terms of payment for rendering these services, to determine that its services are that of a co-loader. At paragraph 16 of the C.B.E.C. Circular F. No. 341/43/96-TRU dated 31.10.1996, the Board has clarified that the co-loaders provide service to the courier agency and they do not provide any service directly to the customer. With regard to the value of taxable service it is clarified that it is the gross amount charged by the courier agency from the customer on which the Service Tax was to be computed. The above clarification was issued after observing that charges of the co-loaders to the courier agency for in-transit movement of goods, documents or articles are in any case ultimately recovered by the courier agency from the customer and these charges are included in the gross amount charged by the courier agencies from customers. Whether any invoice/(s) were raised for the services rendered to these courier companies is also not known since no such documents have been placed on record. Its reasonable belief that it was rendering the services of a co-loader only, is lacking any merit since, as a courier agency, the appellant should be / would be aware that courier services are chargeable to tax and it has not discharged the responsibility that the principal courier has paid the Service Tax on the charges that were collected from the customers. Extended period of limitation - HELD THAT - The entire investigation started only as the appellant had accounted certain income in its trial balance as Courier Income Non-Tax . The appellant has not produced any evidence that either the appellant or the principal courier had made any correspondence with the Department regarding the taxability or otherwise of the income shown in the financial statements. The appellant thus has failed to substantiate its claim as to non-taxability and as to the belief entertained by it that the principal courier must have paid the tax. As such, the extended period of limitation is rightly invoked in the present case. The appeal is dismissed as being devoid of any merits.
Issues Involved:
1. Classification of Services: Whether the services rendered by the appellant are that of a co-loader/courier agency or classified under "support services of business or commerce." 2. Principal Courier's Tax Discharge: Whether the principal couriers discharged the Service Tax on the portion sub-contracted to the appellant. 3. Export of Service: Whether the services rendered by the appellant could be treated as export of service. 4. Extended Period of Limitation: Whether it is justified to invoke the extended period of limitation. Summary: 1. Classification of Services: The Tribunal examined whether the appellant's services fall under "courier agency" or "support services of business or commerce." The appellant contended that their services were those of a co-loader, relying on the Board Circular F. No.341/43/96-TRU dated 31.10.1996, which stated that co-loaders are not liable for Service Tax if the principal courier has discharged the tax. However, the adjudicating authority concluded that the services rendered were not classifiable under co-loader service but under business support service, relying on the Board's clarification dated 12.12.2007. The Tribunal upheld this classification due to lack of substantial evidence from the appellant to prove otherwise. 2. Principal Courier's Tax Discharge: The appellant initially claimed that the principal courier had paid the Service Tax, but later argued that the services amounted to export of service. The adjudicating authority found no evidence supporting the appellant's claim that the principal courier had discharged the Service Tax liability. The Tribunal confirmed that the appellant failed to produce any contract or agreement to substantiate their claim. 3. Export of Service: The appellant claimed that the services were exported and thus not liable for Service Tax. However, the adjudicating authority found that the services were rendered to recipients located in India and payments were received in Indian Rupees, not in foreign currency, as required by the Export of Service Rules, 2005. The Tribunal agreed, noting the absence of Foreign Inward Remittance Certificates (FIRC) to support the claim of export of services. 4. Extended Period of Limitation: The adjudicating authority invoked the extended period of limitation, citing suppression of facts with intent to evade tax. The appellant argued that they relied on the 1996 Board Circular, which was in force until 22.08.2007, and thus had no intention to evade tax. However, the Tribunal found that the appellant failed to disclose the disputed income in its ST-3 returns and did not produce any evidence of correspondence with the Department regarding the taxability of the income. The Tribunal upheld the invocation of the extended period of limitation. Conclusion: The Tribunal dismissed the appeal, confirming the classification of services under business support service, the liability to pay Service Tax, and the invocation of the extended period of limitation. The appellant's arguments were found lacking in merit and evidence.
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