2013 (2) TMI 485 - Commissioner - Service Tax

Container movement charges and Local transport charges Whether Service tax on container movement charges and local transport charges is leviable under CHA service and freight charges is under GTA service Appellant is a registered service provider of Custom House Agent service - not paid Service tax on Container movement charges and Local Transport charges for the period from 18-4-2006 to 31-3-2008 Held that - There is no allegation in the show cause notice seeking to demand Service tax under Custom House Agent service or Goods transport Agency service. However the demand had been confirmed under those heads without invoking them in the SCN. Appellant also arranges transportation of goods belong to the exporter/importer by engaging GTA - Consignment note issued by GTA clearly shows the importer or exporter as the consignor Consignment note also mentions that the Service tax is to be paid by the consignor or the consignee. Even though the appellant pays freight charges to the GTA, separate invoice is raised on the clients for the transportation In this invoice, it is clearly mentioned that the Service tax on the transportation is payable by the importer or exporter and the appellant is not liable to pay Service tax thereon Consignor or consignee has discharged appropriate Service tax Appellant is not liable to pay Service tax on freight charges paid by him and reimbursed by their clients under GTA services as it would result in double taxation. Further As decided in Lee & Muir Head Pvt. Ltd. v. Commissioner of S.T. 2008 (10) TMI 131 - CESTAT, BANGALORE All activities of CHA other than Custom House Agency cannot be taxed under CHA service, applicant are not liable to pay Service tax on container movement charges and transportation charges under CHA services and on freight charges under GTA services. When the services of container movement charges which is nothing but transportation of containers from the CFS to the port is not includible in the value of Custom House Agent Services Order set aside Appeal allowed In favour of assessee.

Summary

Issues:
1. Whether the demand is time-barred.
2. Whether the appellant is liable to pay Service tax on container movement charges, local transport charges under CHA services, and freight charges under GTA services during the disputed period.

Analysis:
1. The appellant filed an appeal challenging the Order-in-Original passed by the Deputy Commissioner of Service Tax, Chennai, for non-payment of Service tax. The appellant argued that the order violated the Principles of Natural Justice by not considering their arguments. They contended that the Show Cause Notice was vague and cryptic, making it impossible for the department to levy Service tax. The appellant also disputed the demand under "Custom House Agent" and "Goods Transport Agency" services, claiming they were neither consignors nor consignees of goods. The appellant argued that the demand was not sustainable as they believed they were not liable to pay Service tax. The department failed to provide evidence that the appellant had charged clients over and above freight charges. The appellant maintained that they were not liable to pay Service tax on transportation charges as they were reimbursements. The appellant also argued against the applicability of Rule 5(2) in their case.

2. The Commissioner analyzed the case and found that the demand was time-barred as there was no suppression of facts by the appellant. The Commissioner noted that the appellant regularly filed returns and paid taxes during the disputed period, indicating no intentional evasion. The Commissioner held that the demand for the period within one year prior to the date of the Show Cause Notice was valid. Regarding the liability to pay Service tax, the Commissioner found that the demand under "Custom House Agent" and "Goods Transport Agency" services was confirmed without proper allegations in the Show Cause Notice, making the order non-maintainable. The Commissioner also considered the appellant's arrangement of transportation services for clients and their reimbursement of charges, concluding that the appellant was not liable to pay Service tax on freight charges under GTA services. The Commissioner referenced relevant case law supporting the appellant's contentions and set aside the impugned Order-in-Original, allowing the appeal.

This detailed analysis covers the issues raised in the legal judgment comprehensively, highlighting the arguments presented by the appellant and the Commissioner's findings and conclusions.