2022 (5) TMI 1042 - AT - Service Tax

Clubbing of clearances - Clearing Forwarding Agent Services - transportation of goods by road with issuance of consignment note for Ultratech - Whether the Revenue is correct in clubbing the two services, which are provided under different agreements as a composite service of C F agency and demand tax? - Scope of SCN - extended period of limitation - HELD THAT - Admittedly the demand in the show cause notice was proposed under the head cargo handling service, whereas in the impugned order-in-original, the demand have been confirmed under the head C F Agency Service. Thus evidently, the adjudicating authority have travelled beyond the scope of show cause notice. Thus, the impugned order is bad on this score alone. This agreement is entered into between Ultratech Cement Ltd and M/s S S Enterprises (proprietor Gunesh India private Ltd). Under the clause, scope of work contained in para 2 of the agreement, it is provided that the appellant-assessee shall call the company officials/depot incharge every day to receive instructions regarding arrival of Rakes at the railway siding situated at Kota RH and also collect information regarding arrival of rakes from the Railway Office. The appellant is also required to track the consignment from the railway online system - The appellant is also required to co-ordinate with secondary transporter engaged by the company to load the cement against orders of customers as per the instructions of company officer. In case, any truck of customer is placed, than the same will also be loaded as per the company's instructions. Admittedly, under this agreement the appellant have deposited the service tax on the full value of consideration and there is no dispute in this regard. The scope of work as provided in the para-2 of the agreement (RUD 2), provides that the appellant shall place trucks for transportation of consignment of the company from railway platform/shed/godown to the various destinations including those of dealers/stockist/individual customers as per the company s instructions on regular basis. The transport work shall be mainly carried out to different places in Rajasthan from Mata ka Than godown under Jodhpur depot. The list of specified destinations is as per the approved freight list forming part of the agreement - under this agreement under the scope of work, the appellant have correctly treated the work as GTA service and service tax have been rightly discharged by the recipient Ultratech Cement Ltd under Reverse Charge Mechanism. Thus, the confirmation of demand on the appellant is bad and accordingly set aside. Extended period of limitation - HELD THAT - There is no case of suppression, contumacious conduct or mis-statement on the part of the appellant. Accordingly, the extended period of limitation is not attracted and have been wrongly invoked by revenue. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Clubbing of different services under a composite service of Clearing & Forwarding (C&F) agency and demand of service tax.
2. Validity of the impugned order for traveling beyond the scope of the show-cause notice (SCN).
3. Classification of services provided under different agreements.
4. Legitimacy of demand computation and applicability of extended period of limitation.
5. Double taxation issue due to payment of service tax by Ultratech under Reverse Charge Mechanism (RCM).

Issue-wise Detailed Analysis:

1. Clubbing of Different Services under a Composite Service of C&F Agency:
The appellant provided two distinct services to Ultratech Cement Ltd: (a) Clearing & Forwarding Agent Services, and (b) Transportation of goods by road. The Revenue clubbed these services as a composite C&F service, demanding service tax on the entire consideration. The appellant argued that these services were provided under separate agreements and should be classified independently. The Tribunal found that the services were indeed provided under different agreements and should not be clubbed as a composite service. This was supported by the decision in Jain Carrying Corporation v. CCE, Jaipur, where separate services under a single contract were classified independently.

2. Validity of the Impugned Order for Traveling Beyond the Scope of SCN:
The SCN proposed the demand under 'cargo handling service,' but the impugned order confirmed the demand under the head of C&F Service. The Tribunal observed that this was beyond the scope of the SCN, making the impugned order unsustainable. It is a settled law that adjudication must be limited to the allegations made in the SCN, as highlighted in Delhi Duty Free Services Private Limited v. Commissioner of CGST, Delhi South.

3. Classification of Services Provided Under Different Agreements:
The appellant had separate agreements for different services, including:
- Rake Handling Agent Agreement: Service tax paid on the entire value.
- Godown Handling Agent Agreement: Service tax paid on handling services.
- Secondary and Primary Transportation Agreements: Treated as GTA services with service tax payable by Ultratech under RCM.
- Transportation work taken from other GTAs: Covered under the negative list of services and not taxable.
The Tribunal found that the classification by the appellant was correct and supported by legal provisions and precedents.

4. Legitimacy of Demand Computation and Applicability of Extended Period of Limitation:
The Tribunal noted that the demand was incorrectly computed, and the extended period of limitation was wrongly invoked. There was no suppression or misstatement by the appellant. The issues involved were related to the interpretation of contractual arrangements and legal provisions, which do not justify invoking the extended period. The Tribunal referenced Gannon Dunkerley & Co Ltd v. CST, where similar findings led to the conclusion that the extended period could not be invoked.

5. Double Taxation Issue Due to Payment of Service Tax by Ultratech Under RCM:
Ultratech had already paid service tax on GTA services under RCM. The Tribunal held that demanding service tax again from the appellant would result in double taxation, which is impermissible. This principle was supported by Sharma Cement Clearing Agency v. CCE, where it was held that service tax cannot be demanded twice on a single transaction.

Conclusion:
The Tribunal set aside the impugned order, finding that the demand was unsustainable on several grounds, including the improper clubbing of services, traveling beyond the scope of the SCN, incorrect classification, and computation of demand. The appellant was entitled to consequential benefits as per the law. The order was pronounced on 19.05.2022.