2024 (4) TMI 627 - AT - Service Tax

Classification of service - Business Support services or not - service of delivery provided to some customers - Arranging transportation - The revenue contended that GTPL collected excess freight charges from customers compared to the amount paid to transporters, suggesting it as additional consideration for the goods sold - HELD THAT - An identical issue has been decided in the case of PUSHPAK STEEL INDUSTRIES PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX PUNE - III 2018 (10) TMI 84 - CESTAT MUMBAI wherein it was held that Since transportation cost, incurred was in context with delivery of goods at the buyers premises, it cannot be said that such facility extended by the appellant should be considered as a taxable service, leviable to Service Tax under the category of 'business support service'. Further, the appellant, in the present case, had not supported the business of the buyers in any manner and arrangement of transportation was just to facilitate delivery of the duty paid excisable goods at the buyer's premises. Thus, the activities undertaken by the appellant, in our considered view, do not confirm to the definition of taxable service, for the purpose of levy of Service Tax thereon. It is noticed that no specific case of the service being provided under the head of business support service has been made out. As observed in Order In Original there is no contract for provision of the business support service between GTPL and their buyers. Even the notice does not show that GTPL were engaged in other than simply organizing transportation of goods. Relying on the decision of Tribunal in the case of Pushpak Steel Industry Private Limited, there are no merit in the appeal filed by revenue. Appeal allowed.

Summary

Issues Involved:
1. Classification of service provided by GTPL: Whether the transportation service provided by GTPL constitutes "business support service."
2. Applicability of extended period of limitation for issuing the second notice.
3. Inclusion of excess freight charges in the value of excisable goods under Central Excise Valuation Rules, 2000.

Summary:

1. Classification of Service Provided by GTPL:
The primary issue was whether the transportation service provided by GTPL amounted to "business support service." The revenue contended that GTPL's service of arranging transportation and charging freight per kg constituted a business support service. However, the original Adjudicating Authority and the Additional Commissioner concluded that the service provided by GTPL did not constitute business support service. The Commissioner (Appeal) partly allowed the revenue's appeal but confirmed the demand under business support service for the difference between the amount charged by GTPL from their customers and the amount paid to transporters.

The Tribunal referred to the case of Pushpak Steel Industries Pvt Ltd, where it was held that arranging transportation for delivering goods does not constitute a taxable service under "business support service." The Tribunal found that GTPL only arranged transportation and did not provide any additional logistics or loading/unloading services. Thus, the Tribunal concluded that the service provided by GTPL was not business support service but rather a part of the transportation service, which falls under the GTA category.

2. Applicability of Extended Period of Limitation:
GTPL argued against the invocation of the extended period of limitation for the second notice, citing that a similar notice had already been issued. The Tribunal did not find sufficient grounds for invoking the extended period of limitation for the second notice.

3. Inclusion of Excess Freight Charges in the Value of Excisable Goods:
The revenue argued that the excess freight charges collected by GTPL should be included in the value of excisable goods under Central Excise Valuation Rules, 2000. However, the Tribunal referred to the case of Indian Sugar and General Engineering Corporation, where it was held that excess freight collected is not includable in the value of excisable goods, provided it is shown separately in the purchase order.

The Tribunal concluded that the excess amount charged by GTPL was for the reimbursement of various expenses incurred for arranging transportation and not for providing any business support service. Therefore, it should not be included in the value of excisable goods.

Conclusion:
The appeals filed by GTPL were allowed, and the appeal filed by the revenue was dismissed. The Tribunal held that the services provided by GTPL did not constitute business support service and the excess freight charges were not includable in the value of excisable goods.