2024 (3) TMI 185 - AT - Service Tax

Levy of Service tax - courier services - Pick-up of shipments from the customers of M/s. Blue Dart in a timely manner in the specified territory - Delivery of shipments to the customers of M/s. Blue Dart in a timely manner within the said territory - HELD THAT - The appellant has rendered the service of speedy, expeditious and timely pick-up and delivery of time-sensitive shipments, packages, documents, etc. The services rendered by the appellant are in the nature of courier agency service as defined in clause (33) of Section 65 of the Finance Act, 1994. It is found that the Board Circular F.No. 341/43/96-TRU dated 31.10.1996 has clarified the Service Tax liability of the services rendered by co-loaders to the courier agencies. A co-loader is required to deliver documents, goods or articles on behalf of the courier agency and charges the courier agency for the service rendered. The appellant has been rendering some other services like tracking the delivery through software applications, submitting a tally of the report at the end of the day, etc. However, we find that all these activities are associated with the courier services only. The primary service rendered by the appellant is courier service and the service of tracking of delivery schedules, managing logistics, accounting, processing transactions, etc., are all ancillary services to their courier services. Thus, the activities rendered by the appellant as a co-loader to the courier agency are categorically exempted from the payment of Service Tax vide the Board Circular mentioned above. The services rendered by the appellant as a co-loader to the courier agency / M/s. Blue Dart are not liable to Service Tax - the demand of Service Tax along with interest and penalty confirmed in the impugned order set aside - appeal allowed.

Summary

Issues involved:
The appeal against the Order-in-Original confirming Service Tax demand, interest, and penalty.

Details of the judgment:
The appellant, a courier service provider, entered into an agreement with a company for pick-up and delivery services. The Service Tax Commissionerate classified their services as 'Business Support Services' and issued a Show Cause Notice for non-payment of Service Tax. The Ld. Commissioner confirmed the demand in the impugned order. The appellant contended that their services qualify as 'courier agency service' under the Act and should not be classified as 'Business Support Services'. They argued that the Show Cause Notice did not specify the category under which their services were classified. The appellant also claimed that their services were exempt from Service Tax as they were akin to 'co-loader services'. They further argued that there was no suppression of information and the demand should be set aside due to limitation issues.

The Departmental Representative supported the findings in the impugned order. The Tribunal observed that the appellant's services were indeed akin to 'courier agency service' as defined in the Act. Referring to a Board Circular, the Tribunal noted that co-loaders providing services to courier agencies are not liable to pay Service Tax. The Tribunal found that the primary service rendered by the appellant was courier service, and ancillary activities like tracking deliveries were exempt from Service Tax. Citing previous decisions, the Tribunal held that the appellant's services as a co-loader were not subject to Service Tax. Consequently, the demand for Service Tax, interest, and penalty was set aside, and the appeal was allowed.

(Order pronounced on 04.03.2024)