2024 (4) TMI 398 - AT - Service Tax

Classification of services - Cargo Handling Services or Works Contract Services - whether the air cargo building constructed by the assessee/Appellant can be considered as part of the airport or not? - HELD THAT - The air cargo agent building is admittedly constructed as an annexee building to the air cargo terminal and the same is necessary for the smooth functioning of the air cargo terminal. It is admitted fact that both incoming and outgoing cargo is partly processed by the air cargo agents facilitating the main processing and clearance for export/import in the air cargo terminal. In the facts and circumstances it is held that the air cargo agent building constructed by the Appellant forms part of the airport/Aerodrome and accordingly the said activity stands excluded under the exclusion clause in the definition of works contract service. The impugned order is set aside - appeal allowed.

Summary

Issues Involved:

1. Whether the construction of the 'cargo agents building' by the Appellant falls within the ambit of 'airport' and thus exempt from service tax.
2. Whether the extended period of limitation is invokable for the demand of service tax.
3. Whether penalties u/s 77 and 78 of the Finance Act are applicable.

Summary:

1. Construction of 'Cargo Agents Building' as Part of Airport:
The Appellant, SEW Infrastructure Private Limited, contended that the construction of the 'cargo agents building' at GMR Hyderabad International Airport Ltd. (GHIAL) falls within the ambit of 'airport' as per Section 65(105)(zzzza) of the Finance Act and the definitions provided in the Airport Authority of India Act, 1994, and the Aircraft Act, 1934. The Appellant argued that the building is essential for airport operations, being adjacent to the cargo terminal and directly connected to the runway, thus should be excluded from service tax. The Tribunal agreed with the Appellant, noting that the 'air cargo agent building' is necessary for the smooth functioning of the air cargo terminal and forms part of the airport/Aerodrome. Consequently, the activity stands excluded under the definition of works contract service.

2. Extended Period of Limitation:
The Revenue argued that the Appellant suppressed the taxable value with an intention to evade service tax, justifying the invocation of the extended period of limitation. However, the Tribunal did not specifically address this issue in the judgment, as the primary contention regarding the classification of the 'cargo agents building' was resolved in favor of the Appellant.

3. Penalties u/s 77 and 78:
Given the Tribunal's decision that the 'cargo agents building' is part of the airport and thus exempt from service tax, the penalties imposed u/s 77 and 78 of the Finance Act were set aside. The Tribunal allowed the appeal, setting aside the impugned order and entitling the Appellant to consequential benefits in accordance with the law.

Conclusion:
The appeal was allowed, and the impugned order was set aside, affirming that the construction of the 'cargo agents building' by the Appellant is part of the airport and exempt from service tax. The Appellant is entitled to consequential benefits.