2024 (1) TMI 725 - AT - Service Tax

Classification of services - Cargo Handling Service or not - amount collected as ocean freight saving and dispatch earning during 2010 -2011 - HELD THAT - This Tribunal has already considered the very same issue in the respondent s own case M/S. MOSAIC INDIA PVT. LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST., RAJKOT 2014 (12) TMI 169 - CESTAT AHMEDABAD and by giving proper reasoning dropped the demand. From the above decision of the Tribunal it can be seen that the issue in hand and the issue involved in the above case is identical and since the issue has been settled by this Tribunal, the present appeal do not have any substance. The impugned order is upheld - appeal of Revenue dismissed.

Summary

Issues involved:
Classification of income under service tax categories u/s Section 65(23) and Section 65(82) of the Finance Act, 1994.

Summary:

Issue 1: Classification of income under service tax categories

The case involved respondent M/S. Mosaic India Pvt Ltd, engaged in import, trading, and distribution of fertilizer, receiving income categorized as 'service income' including ocean freight saving. The department claimed the income should be classified under 'Cargo Handling Service' and 'Port Services' for different periods. A show cause notice was issued for service tax payment, which was dropped by the adjudicating authority, leading to the revenue's appeal.

Issue 2: Contention of the Revenue

The Revenue argued that the service provided for handling cargo should be classified as such, despite the respondent providing services to their foreign holding company, contending the dropping of proceedings was incorrect.

Issue 3: Respondent's Submission

The respondent's counsel referred to a previous Tribunal decision where a similar issue was considered, and the demand was set aside, indicating the issue was settled. The Tribunal had already given reasoning and dropped the demand in the respondent's favor previously.

Decision:

Upon reviewing the submissions, the Tribunal noted the previous decision where it was established that the income received was an incentive from the foreign principal, not a service provided. The Tribunal emphasized the need for a service provider and recipient, concluding that no service was involved as the goods belonged to the appellant. The Tribunal also clarified that separate services provided under different contracts should be treated as such, not as a composite service. As the issues were decided in favor of the appellant previously, the current appeal was dismissed, upholding the impugned order.

This judgment highlights the importance of distinguishing between income categories for service tax purposes and the necessity of a clear service provider-recipient relationship in determining tax liability.