2009 (5) TMI 178 - AT - Service Tax

The appellants are handling various types of cargo through their aircrafts at various airports. The activity involved is loading/unloading and transport of cargo. Revenue proceeded against the appellants on the ground that the said activity would be liable to Service Tax under the category of cargo handling service . - issue has been squarely covered by the decision of the Ahmedabad Bench of the Tribunal in the appellant s own case reported at M/s JET AIRWAYS (INDIA) LTD Versus CST, AHMEDABAD 2008 - TMI - 4448 - CESTAT, AHMEDABAD , wherein it is held that cargo from consignor s premises not collected and not delivered to consignee and contractor undertaking cargo handing work - the transportation of cargo from one place to another by the airways would not amount to-cargo handling services activity is not covered under Cargo Handling Service appeal allowed

Issues:
Interpretation of whether the activity of transporting cargo by air amounts to "cargo handling service" liable to Service Tax.

Analysis:
The case involved the appellants handling various types of cargo through their aircraft at various airports, which included loading/unloading and transport of cargo. The Revenue contended that this activity would be subject to Service Tax under the category of "cargo handling service." The appellant argued that the transportation of cargo by airways does not constitute cargo handling services, citing a previous decision by the Ahmedabad Bench of the Tribunal in their own case. The appellant neither collected nor delivered cargo, and the loading and unloading activities were performed by a third party, M/s. Universal Services. The Ahmedabad Bench decision emphasized that cargo handling services must be provided by a cargo handling agency in relation to cargo handling services, which the appellants were not perceived as. The appellants were viewed as an airline company, not a cargo handling agency, and the services provided were an integral part of transportation services, not standalone cargo handling services.

The Tribunal analyzed the definition of cargo handling services and emphasized that the services must be provided by a cargo handling agency in relation to cargo handling services. The Tribunal applied the principle that the expression in the taxing statute should be construed in its popular sense, and commercial understanding should be preferred. The Tribunal noted that the services provided by airlines for transportation of goods by air were not covered under cargo handling services, as clarified in a Board circular. Drawing parallels with a previous Tribunal decision regarding business auxiliary services, the Tribunal held that the incidental service of collecting cargo for transportation did not fall under cargo handling services. Additionally, the Tribunal considered a Board circular detailing cargo handling agents, which did not include airlines providing transportation services, further supporting the conclusion that airline services for cargo transportation were not cargo handling services.

The Tribunal also considered the introduction of new entries without disturbing existing ones and referred to a previous Tribunal decision to support the interpretation that new entries were not covered by previous ones. Based on the discussion and reasoning, the Tribunal set aside the impugned order and allowed the appeal with consequential relief to the appellant, as the services provided by the airlines for transportation of cargo did not fall under the category of cargo handling service. The decision was made based on the interpretation of relevant legal provisions, precedents, and commercial understanding of the services provided by the appellants.

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