2017 (11) TMI 482 - AT - Service Tax

C&F service - Department was of the view that the amounts covered by invoices issued towards transportation was nothing but a part of the consideration received by the appellant from YMI for clearing and forwarding services - Held that - C&F service rendered for YMI include not only receipt and storage of the vehicle, but also despatch of the same to the destination. Under such terms of the provision of service, all consideration received by the appellant from YMI should form part of the consideration for payment of tax under C&F agent service. Since loading and unloading, handling and transportation of goods upto the destination was an integral part of C&F service, we are of the view that transportation charges alone cannot be bifurcated and charged separately to service tax under GTA service - also, the appellant does not satisfy the condition of being considered as Goods Transport Agency. The transportation charges received should form part of the consideration for C&F service - appeal dismissed - decided against appellant.

Summary

Issues:
Appeals against order-in-appeal regarding demand for service tax on clearing and forwarding agent service and transportation of goods by road service.

Analysis:
The appeals were filed against the order-in-appeal passed by the Commissioner (Appeals) regarding the demand made for the period April 2011 to March 2013 for services taxable under Section 65(105)(j) and Section 65(105)(zzp) of the Finance Act, 1994. The appellants were appointed as Clearing and Forwarding Agents of a company and started raising separate invoices for C&F service and transportation service. The department claimed that the transportation charges were part of the consideration for C&F service, leading to a demand for service tax under C&F services along with interest and penalty.

The appellant argued that service tax on transportation freight cannot be part of the C&F agent service as the recipient of the transportation service had already paid service tax under reverse charge mechanism. The department contended that the agreement with the company covered C&F services, including transportation, and all charges were consolidated. The Tribunal noted that the agreement required the appellant to provide C&F services, including storage and dispatch of goods, and all consideration received should form part of the tax payment under C&F agent service. Since transportation was integral to C&F service, the Tribunal held that transportation charges should not be separately taxed under Goods Transport Agency service.

Ultimately, the Tribunal upheld the impugned orders, rejecting the appeals and emphasizing that transportation charges received should be considered part of the consideration for C&F service. The judgment was pronounced on September 22, 2017.