2017 (12) TMI 1135 - AT - Service Tax

Valuation - inclusion of reimbursement of expenses - Clearing and forwarding agency service - Circular F. No. B. 43/7/1997-TRU dated 11/07/1997 - Held that - the issue covered by the decision in the case of M/s BALMER LAWRIE & CO LTD Versus CCE, RAIGAD 2013 (11) TMI 712 - CESTAT MUMBAI , where it was held that In case where the Cargo Handling Service and transportation services are rendered, and if in the bills raised for the services rendered, transportation is shown separately (on actual basis, verifiable by documentary evidence), the tax would be leviable only on the Cargo Handling Charges - the appellant have rightly discharged the service tax and we take notice of the fact that on the GTA service, the recipient or the principal of the appellant have discharged service tax on reverse charge basis. Demand of service tax, again on the same transaction from the appellant is bad in spite of the Department accepting the service tax paid by the recipient of service on reverse charge basis. Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Whether the appellant is liable to pay service tax on the transport charges received for providing Clearing & Forwarding Agent Services.
2. Whether the appellant correctly discharged the service tax liability for both Clearing & Forwarding Agent services and transportation services.
3. Whether the demand for service tax on the same transaction from the appellant is valid despite the recipient of the service discharging the service tax on reverse charge basis.

Analysis:
Issue 1:
The appellant, a Clearing & Forwarding Agent, was providing services to a principal company, including loading, unloading, transportation, and supervision. The Revenue contended that the transport charges received by the appellant were an integral part of the services rendered and should be included in the taxable value for service tax purposes. The agreement between the parties indicated that the appellant was responsible for arranging transportation, and as per the definition of Clearing and Forwarding Agent, the services provided fell within the taxable service category. Therefore, the appellant was held liable to pay service tax on the transport charges received.

Issue 2:
The appellant argued that they had discharged the service tax liability separately for Clearing & Forwarding Agent services and transportation services. They contended that the transactions were distinct, with the principal company discharging the service tax on transportation charges under the Goods Transport Agency (GTA) service on a reverse charge basis. Citing a precedent where separate services were taxed accordingly, the appellant maintained that they had correctly discharged the service tax liability. The Tribunal acknowledged the separate billing for C & F service and transportation/GTA services, concluding that the appellant had appropriately discharged the service tax liability.

Issue 3:
Despite the recipient of the service discharging the service tax on reverse charge basis for the transportation services, the Revenue demanded service tax from the appellant on the same transaction. The Tribunal, considering the separate tax payments made by the parties and the certificate confirming the recipient's compliance with service tax rules, deemed the demand for service tax from the appellant unjustified. Consequently, the Tribunal set aside the impugned order, ruling in favor of the appellant and granting them consequential benefits, leaving the question of limitation open for further consideration.