2017 (9) TMI 923 - AT - Service Tax

Classification of service - composite services consisting of a combination of different services - services of loading, unloading, together with shifting/transportation of household articles to various customers - whether classifiable under Cargo Handling Service or GTA service? - penalty - Held that - It is a matter of fact that the customers never approach the appellant only for loading, unloading, packing or unpacking of goods - Considering the sensitive nature of the goods being transported, the appellant also undertakes other activities of packing etc., if so desired by its customers, which are optional. Thus, the modus operandi adopted by the appellant transpires that the principal aim and objective is for transportation of goods and providing of other services are incidental and ancillary to the main purpose of transportation. The decision in the case of Drolia Electrosteels Pvt. Ltd. 2015 (12) TMI 161 - CESTAT NEW DELHI is squarely applicable to the facts of the present case, wherein by relying on the CBEC Circular No.104/7/2008-S.T., dated 06.08.2008, the Tribunal has held that the service provided by M/s Hira Industries (appellant therein) merits classification under the GTA service and not under Cargo Handling Service. The services provided by the appellant will appropriately classifiable under GTA service, instead of Cargo Handling Service - However, since the appellant has wrongly claimed abatement and subsequently paid the service tax amount of ₹ 14,10,083/-, the confirmation and appropriation of such amount in the impugned order is proper and justified. Appeal allowed - decided partly in favor of appellant.

Summary

Issues:
Proper classification of services under 'Cargo Handling Service' or 'Goods Transport Agency (GTA) Service'.

Analysis:
The appeal challenged an order confirming a Service Tax demand against the appellant for providing services related to loading, unloading, and transportation of household articles. The dispute centered on whether the services should be classified as 'Cargo Handling Service' or 'GTA Service'. The appellant contended that the main service provided was transportation of goods, with other activities being incidental. The Revenue argued that the primary service was packing, loading, unloading, and unpacking, hence falling under 'Cargo Handling Service'.

The Tribunal analyzed the definitions of 'Goods Transport Agency' and 'Cargo Handling Service' under the Finance Act, 1994. It noted that if the primary objective was transportation and other services were incidental, it would be classified as GTA Service. Conversely, if loading, unloading, etc., were the main activities, it would fall under Cargo Handling Service. The Tribunal referred to Section 65 A for classification of composite services based on their essential character.

It was established that the appellant issued consignment notes for transportation of goods, a requirement under the Carriage by Road Act, 2007. The Tribunal observed that customers engaged the appellant primarily for transportation, with other services being optional and ancillary. Relying on judicial interpretation and CBEC Circulars, it emphasized that transportation was the essential character of the service provided by the appellant.

The Tribunal highlighted Circulars clarifying that when a GTA service provider includes packing in the service provided, it should be treated as GTA Service, not Cargo Handling Service. It noted that the impugned order had disregarded these Circulars and relied on an irrelevant circular. Citing a relevant precedent, the Tribunal concluded that the services provided by the appellant should be classified under GTA Service, overturning the impugned order.

The Tribunal allowed the appeal in favor of the appellant, setting aside the classification under 'Cargo Handling Service'. However, it upheld the confirmation and appropriation of the service tax amount claimed in error. The appeal was disposed of accordingly on 21.08.2017.