2024 (3) TMI 1136 - AT - Service Tax

Non-payment of service tax - Customs House Agent and Storage and Warehousing Services - non-payment of service tax on the value of services rendered on account of ground rent of empty containers - non-payment of service tax on services rendered in respect of handling of empty containers under the category of Storage and Warehousing Services - HELD THAT - Due to the plea of the appellant being eligible of cum tax benefit that this Tribunal vide Final Order No. 56944/2013 dated 04.07.2013 had remanded back the matter. It is observed that subsequent to remand the benefit of cum tax has been given to the appellant accordingly the entire demand on the aforementioned first issue was absolutely dropped. However the demand on second count is confirmed holding the activity done by the appellant to be called as storage and warehousing services. It is observed that there is no denial about discharge of service tax by the appellant with respect to handling of empty containers which were stored in the appellant s area or were warehouse. The demand is with respect to such empty containers which were handled prior reaching the appellant s storage area/warehouse. The issue therefore is as to whether the said activity can be called as the part of taxable service Storage and Warehousing . No doubt Circular No. 60/9/2003-ST dated 10.07.2003 clarifies that handling of empty containers would be covered within the scope of Storage and Warehousing Services. However for the applicability of this circular the goods/empty containers should first have been stored or warehoused and should be handled within the said warehouse or the storage space. Apparently and admittedly the same is not the case for the impugned demand. Hence the appellant s activity of handling containers cannot be called as taxable activity of storage and warehousing. The handling of the containers which were never stored or warehoused since is not covered in the taxable activity of storage and warehousing the service tax on the amount received for handling of nonstored/ non-warehoused empty containers is wrongly demanded and thus is held to have wrongly been confirmed. The activity of handling of container cannot to be covered under the taxable activity of cargo handling as cargo handling service also. This activity is essentially a service in relation to merchandise - The Circular No. B11/1/2002-TRU has explained that empty containers cannot be treated as cargo. In light of these observations the activity in question cannot even be called as the taxable activity of Cargo Handling Service. The order under challenge for the said reason is liable to be set aside. The order under challenge is held not sustainable. Same is accordingly therefore set aside - Appeal allowed.

Summary

Issues involved:
The issues involved in the judgment are non-payment of service tax on ground rent of empty containers and handling charges of empty containers under the category of Storage and Warehousing Services.

Issue 1: Non-payment of service tax on ground rent of empty containers:
The appellant failed to pay service tax on the value of services rendered for ground rent of empty containers during a specific period, resulting in non-payment of Rs.1,02,416. A Show Cause Notice was issued proposing recovery of this amount along with interest and penalty. The order confirming this proposal was initially passed, and subsequent appeals were made against it. The Tribunal remanded the matter for re-adjudication, considering the cum tax value and the benefit thereof. Eventually, the demand for this issue was dropped after granting the cum tax benefit to the appellant.

Issue 2: Handling charges of empty containers under Storage and Warehousing Services:
The appellant was found to have not paid service tax on handling charges of empty containers during a certain period. The authorities initially confirmed this demand, leading to appeals and subsequent remand by the Tribunal for re-adjudication. The Order-in-Original dated 13.12.2016 granted cum tax benefit to the appellant for handling of empty containers, resulting in the correct payment of service tax. However, the demand for this issue was confirmed as the activity was deemed to be Storage and Warehousing Services. The appeal against this confirmation was disposed of, upholding the findings of the original adjudicating authority except for the penalty. The appellant challenged this order before the Tribunal, arguing that the activity was not covered under taxable service of storage and warehousing of empty containers.

Judgment Summary:
The Tribunal considered the arguments presented by both parties regarding the activity of handling empty containers under Storage and Warehousing Services. The appellant contended that the impugned activity was not covered under this taxable service, citing specific scenarios involving the movement of empty containers. The Departmental Representative, however, relied on Circulars to support the inclusion of handling empty containers within the scope of Storage and Warehousing Services.

Upon deliberation, the Tribunal observed that the Circulars mentioned by the Departmental Representative required the containers to be stored or warehoused before handling, which was not the case for the disputed demand. Therefore, the Tribunal concluded that the service tax on handling non-stored empty containers was wrongly demanded and confirmed. Additionally, it was noted that the activity could not be classified as Cargo Handling Service as empty containers did not qualify as merchandise.

Consequently, the Tribunal held the order under challenge as unsustainable and set it aside, allowing the appeal in favor of the appellant.

[Pronounced in the open court on 22.03.2024]