2020 (4) TMI 836 - AT - Service Tax

Classification of Services - Port Services or CHA services - transport of export goods to the custom station or import goods from custom station to the importers premises in their own trucks - charges collected as stevedoring charges - It is the case of the Revenue that the transportation activities undertaken by them is an ancillary service which is part of the composite service of CHA Service - HELD THAT - The stevedoring activity is loading and unloading of cargo. He explained that this activity is rendered by the appellant on his own behalf. He is actually directly dealing with the party. The appellant is only licensed by the port to undertake the stevedoring activity and these activities had not been done on behalf of the port neither they had been authorized by the port to do any port services. CHA Services - HELD THAT - This transportation charges are clearly reimbursable from their customers and they have to be necessarily excluded from the amount received from their customers. In these circumstances, the demand of Service tax by including the transportation charges collected by the appellant is not in order. Therefore, this is also liable to be set aside. Summing up the demand on account of stevedoring services and by inclusion of transportation charges under the category of CHA services is not sustainable - Since the demands are not sustainable, there is no justification for imposition of any of the penalty - Appeal dismissed - decided against Revenue.

Summary

Issues:
- Whether transportation charges collected by the appellant for Custom House Agent services are liable for service tax.
- Whether the demand on account of stevedoring services and transportation charges under CHA services is sustainable.
- Whether penalties under Sections 76, 77, and 78 of the Finance Act, 1994 are justified.

Analysis:
1. Transportation Charges for CHA Services:
The case involved the provision of services by the appellant as Steamer Agent, Custom House, and Cargo Handling Services. The Revenue contended that transportation activities undertaken by the appellant were ancillary services forming part of the composite service of "CHA Service." Show cause notices were issued demanding service tax, interest, and penalties. The adjudicating authority upheld the demand and imposed penalties. However, the Commissioner(Appeals) set aside the order, leading to the Revenue's appeal before the Tribunal.

2. Precedent and Legal Interpretation:
The Tribunal referred to a previous order in the respondent's case where a similar issue was decided in favor of the appellant. The Tribunal highlighted that stevedoring services should not be considered as Port Services for service tax purposes based on established legal precedents. Additionally, the appellant demonstrated that transportation charges were separately accounted for in bills, indicating reimbursement from customers. Consequently, the demand on account of stevedoring services and transportation charges under CHA services was deemed unsustainable, leading to the dismissal of the appeal.

3. Penalties Imposition:
Since the demands were found to be unsustainable, the Tribunal concluded that there was no basis for imposing penalties under Sections 76, 77, and 78 of the Finance Act, 1994. The impugned order was set aside, and the appeal was allowed with consequential relief. The decision of the Tribunal was subsequently upheld by the Hon'ble High Court of Kerala upon the Revenue's appeal.

4. Final Decision:
The Tribunal, after considering the arguments and legal interpretations presented, found no reason to interfere with the impugned order. Consequently, the appeal filed by the appellant Revenue was dismissed, and the operative portion of the order was pronounced in Open Court on 02/03/2020.

This detailed analysis of the judgment highlights the legal intricacies, precedents, and reasoning behind the Tribunal's decision on each issue raised in the case.