2024 (9) TMI 1360 - AT - Service Tax

Short payment of service tax - courier agency services - difference in income reflected in ST-3 returns and profit and loss account, due to the exempted services provided - period 2006-07 to 2010-11 - HELD THAT - In the case of GIHED documents, the appellant has billed the multiple exhibitors of GIHED in their individual names C/o GIHED Stall No., Penta Freight Pvt. Limited has billed in the name of appellants while issuing Housed Airway Bill in the name of GIHED, Ahmedabad with destination at GIHED, World Gujarati Conference, USA and airlines Jet Airways/Continental Airlines has issued Air-Way Bill to Penta Freight Pvt Limited. Whereas the bills issued by the appellants to individual exhibitors ranges approx. from 250 Kgs to 1000 kg. per consignment, Housed Airway Bill/ Airway Bill issued by Peta prefight Pvt Limited/ Airlines are 5000 Kg. plus thus aggregating multiple consignments of the exhibitors. The description as per Airway Bill reads as Exhibition cargo as for display purposes only . It would be pertinent to mention that the time sensitive documents, goods or articles would be such volume/ weight that an individual could handle the same and deliver it personally. The expression utilizing the services of a person to our view mean that the person here means an individual and not a juristic person. As is a trade practice and as suggested by the above definition, small goods or articles capable of being handled and delivered by an individual would be covered under the definition of courier service - Larger consignments howsoever may be time sensitive or the requirement for door-to-door delivery, would not be classified as courier services but as cargo. Another factor which is crucial to examine is that normally a courier agency aggregates small consignments of documents, goods or articles and there are different senders and the place of destination for door-to door delivery - when a courier agency service is provided for door-to-door delivery, all the transporters taking responsibility to deliver the consignment from the booking stage to the final door delivery would fall under the courier agency service and the cascading effect of taxation can be avoided by input credit claim. It is now well established that a sub-contractor is obliged to discharge tax independent of the main contractor. There are no record/ data to examine other than the above two specific consignments, we are constrained to remand back the case to the original authority to examine the documents of the appellants afresh in the light of above observations - appeal allowed.

Summary

Issues Involved:
1. Difference in income reflected in ST-3 returns and profit and loss account.
2. Classification of services provided by the appellant (courier agency, co-loader services, and air freight services).
3. Applicability of service tax on the differential value between ST-3 returns and ledger income.
4. Interpretation of "courier agency services" under Section 65(33) of the Finance Act, 1994.
5. Examination of specific consignments to determine the nature of services provided.
6. Application of extended period of limitation and penalties under Sections 76 & 78 of the Finance Act, 1994.

Issue-wise Detailed Analysis:

1. Difference in Income Reflected in ST-3 Returns and Profit and Loss Account:
The appellant, a registered courier agency service, was found to have discrepancies between the income shown in their ST-3 returns and their profit and loss account. The income reflected in the ST-3 returns was significantly lower compared to the profit and loss account for the years 2005-06 to 2010-11. The appellant attributed this difference to exempted services that do not attract service tax, such as co-loader services and air-freight charges on exports.

2. Classification of Services Provided by the Appellant:
The appellant's business involved three types of transactions:
(a) Courier agency services, for which service tax was paid and returns filed.
(b) Co-loader services, where the actual courier service was provided by another agency, and the appellant did not charge for these services, considering them exempt.
(c) Air freight services for export cargo, where the appellant booked rates from authorized IATA agents and sold them to associates and exporters, adding a margin but not charging service tax due to the exemption for transport of export goods.

3. Applicability of Service Tax on the Differential Value:
A show cause notice was issued demanding service tax on the differential value between the ST-3 returns and ledger income, amounting to Rs. 2,82,62,810/-. The appellant argued that the entire difference in receipts was presumed to be taxable service without considering the exempt services. They contended that this was a matter of reconciliation and interpretation, not evasion, and should not attract extended limitation or penalties.

4. Interpretation of "Courier Agency Services" under Section 65(33) of the Finance Act, 1994:
The appellant argued that their airport-to-airport transport of export cargo did not meet the definition of "courier agency services" as it did not involve door-to-door delivery or time-sensitive goods. They relied on the Hon'ble Gujarat High Court's decision in CCE, Surat-l vs. Patel Vishnu Bhai Kantilal & Co., which outlined the prerequisites for a service to be classified as a courier agency service. The court's interpretation emphasized that the service must involve door-to-door transportation of time-sensitive documents, goods, or articles, utilizing the services of a person to carry or accompany them.

5. Examination of Specific Consignments:
The tribunal examined two specific consignments:
(a) GIHED Sales income, where the appellant handled logistics for an exhibition in the USA. The appellant provided integrated services but argued that these were freight charges, not courier services.
(b) Infinity Logistics, where the appellant transported cargo from Hyderabad to Madrid. The tribunal found that the services were freight cargo, not courier consignments, as they involved large volumes and were not door-to-door deliveries.

6. Application of Extended Period of Limitation and Penalties:
The tribunal noted that the matter involved interpretation and reconciliation of figures. The appellant argued that the difference in opinion on classification and taxability did not indicate an intention to evade tax. The tribunal refrained from passing orders on limitation and penalties, remanding the case back to the original authority for a fresh examination based on the documents and explanations provided by the appellant.

Conclusion:
The tribunal concluded that the consignments in question were freight cargo, not courier services, and remanded the case to the original authority for a fresh examination of the documents. The tribunal emphasized that a strict interpretation of the definition of courier agency services was necessary and that larger consignments should be classified as cargo services. The appellant was allowed to present additional documents and arguments during the de novo proceedings. The tribunal refrained from making a final decision on limitation and penalties, leaving these aspects to be examined afresh by the original authority.