Custom, Excise & Service Tax Tribunal
M/S Swayam Shipping Services Pvt. Ltd vs Commissioner Of Central Excise & ... on 8 February, 2018
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT AHMEDABAD Appeal No. ST/13270/13 (Arising out of Order-in-Original No. 69/COMMR/2013 dated 24.6.2013 passed by the Commissioner of Central Excise & Service Tax, Rajkot). M/s Swayam Shipping Services Pvt. Ltd. Appellant Vs. Commissioner of Central Excise & Service Tax, Rajkot Respondent
Appearance:
Shri Jigar Shah, Advocate for Appellant Shri J. Nagori, Addl. Commissioner (AR) for Respondent CORAM:
HONBLE DR. D.M. MISRA, MEMBER (JUDICIAL) HONBLE SHRI RAJU, MEMBER (TECHNICAL) Date of Hearing: 08.02.2018 Date of Decision: 08.02.2018 ORDER NO. A/10660 / 2018 Per: Raju This appeal has been filed by M/s Swayam Shipping Services Pvt. Ltd. against confirmation of demand and imposition of penalty.
2. Learned Counsel for the appellant pointed out that they are engaged in movement of wooden logs from the Port area to the importers premises. The appellants were paying Service Tax under the category of GTA services. The appellants were only loading timber logs from the port area and lift them into truck/trailers and transported it to area situated in the ranges of around 50 to 60 km. He pointed out that to avoid litigation, they started paying Service Tax on the total income including transport from Port considering it is cargo handling. He pointed out that there was no written agreement and they were involved in the activity of transport the logs from the port to their clients premises. Learned Counsel pointed out that the main activity of the appellant was loading/unloading of timber logs into the truck/trolley and transport of the same to nearby location of the importer. Learned Counsel argued that the case is covered by the decision of the Tribunal in the case of Gujarat Chem Port Terminal - 2008 (9) STR 386 (Tri-Ahmd), wherein in a similar circumstances benefit was granted. He also relied on the decision of the Tribunal in the case of R.K. Transport Co. - 2012 (27) STR 496 (Tri-Del). Learned Counsel further argued that they are Goods Transport Agent and they are also issuing consignment notes. Learned Counsel further argued that entire demand is barred by limitation. He pointed out that the show-cause notice was issued on 12.11.2010. He pointed out that in the instant show-cause notice dated 12.11.2010 has been issued invoking the extended period of limitation. He relied on the decision of Hon'ble Supreme Court in the case of Nizam Sugar Factory - 2008 (9) STR 314 (SC) and in case of ECE Industries Ltd. - 2004 (164) ELT 236 (SC) to assert that the extended period of limitation cannot be invoked.
3. Learned AR relies on the impugned order.
4. We have considered the rival submissions. We find that the learned Counsel for the appellant has contended that they are primarily involved in loading/unloading of timber logs into the truck/trailer and transport of the same to the nearby location of the importer. They have also pointed out that they are issuing consignment note for these transportations and they are discharging duty liability under the category of GTA. Learned Counsel has relied on the CBEC Circular No. 104/7/2008-ST dated 6.8.2008, wherein the following were clarified: -
3.?Issue :?GTA provides service to a person in relation to transportation of goods by road in a goods carriage. The service provided is a single composite service which may include various intermediary and ancillary services such as loading/unloading, packing/unpacking, transshipment, temporary warehousing. For the service provided, GTA issues a consignment note and the invoice issued by the GTA for providing the said service includes the value of intermediary and ancillary services. In such a case, whether the intermediary or ancillary activities is to be treated as part of GTA service and the abatement should be extended to the charges for such intermediary or ancillary service?
Clarification :?GTA provides a service in relation to transportation of goods by road which is a single composite service. GTA also issues consignment note. The composite service may include various intermediate and ancillary services provided in relation to the principal service of the road transport of goods. Such intermediate and ancillary services may include services like loading/unloading, packing/unpacking, transshipment, temporary warehousing etc., which are provided in the course of transportation by road. These services are not provided as independent activities but are the means for successful provision of the principal service, namely, the transportation of goods by road. The contention that a single composite service should not be broken into its components and classified as separate services is a well-accepted principle of classification. As clarified earlier vide F.No. 334/4/2006-TRU, dated 28-2-2006 (para 3.2 and 3.3) [2006 (4) S.T.R. C30] and F. No. 334/1/2008-TRU, dated 29-2-2008 (para 3.2 and 3.3) [2008 (9) S.T.R. C61], a composite service, even if it consists of more than one service, should be treated as a single service based on the main or principal service and accordingly classified. While taking a view, both the form and substance of the transaction are to be taken into account. The guiding principle is to identify the essential features of the transaction. The method of invoicing does not alter the single composite nature of the service and classification in such cases are based on essential character by applying the principle of classification enumerated in section 65A. Thus, if any ancillary/ intermediate service is provided in relation to transportation of goods, and the charges, if any, for such services are included in the invoice issued by the GTA, and not by any other person, such service would form part of GTA service and, therefore, the abatement of 75% would be available on it. 4.1 Learned Counsel argued that mere loading and unloading of timber logs at the port or at the premises of the importer does not confirm the activity undertaken by them into cargo handling activity. He pointed out that the clarification of the CBE&C also substantiated their argument in this regard. He had also relied on the CBE&C clarification dated 5.10.2015, wherein the following has been clarified: -
3.?Goods Transport Agency (GTA) has been defined to mean any person who provides service to a person in relation to transport of goods by road and issues consignment note, by whatever name called. The service provided is a composite service which may include various ancillary services such as loading/ unloading, packing/unpacking, transshipment, temporary storage etc., which are provided in the course of transportation of goods by road. These ancillary services may be provided by GTA himself or may be sub-contracted by the GTA. In either case, for the service provided, GTA issues a consignment note and the invoice issued by the GTA for providing the said service includes the value of ancillary services provided in the course of transportation of goods by road. These services are not provided as independent activities but are the means for successful provision of the principal service, namely, the transportation of goods by road.
4.?A single composite service need not be broken into its components and considered as constituting separate services, if it is provided as such in the ordinary course of business. Thus, a composite service, even if it consists of more than one service, should be treated as a single service based on the main or principal service. While taking a view, both the form and substance of the transaction are to be taken into account. The guiding principle is to identify the essential features of the transaction. The interpretation of specified descriptions of services in such cases shall be based on the principle of interpretation enumerated in section 66F of the Finance Act, 1994. Thus, if ancillary services are provided in the course of transportation of goods by road and the charges for such services are included in the invoice issued by the GTA, and not by any other person, such services would form part of GTA service and, therefore, the abatement of 70%, presently applicable to GTA service, would be available on it.
5.?It is also clarified that transportation of goods by road by a GTA, in cases where GTA undertakes to reach/deliver the goods at destination within a stipulated time, should be considered as services of goods transport agency in relation to transportation of goods for the purpose of Notification No. 26/2012-S.T., dated 20-6-2012, serial number 7, so long as (a) the entire transportation of goods is by road; and (b) the GTA issues a consignment note, by whatever name called. 4.2 Learned Counsel has pointed out that the consistent stand of Revenue has been ancillary activity undertaken to undertake the main contract of the transportation do not change the activity of the service provider. Tribunal in the case of R.K. Transport (supra) has also examined similar issue and come to following conclusion 15.?Nothing in the two contracts indicates that these contracts had any significant component of cargo handling other than transportation. In the activities carried out by the appellants there appears to be a small component of loading and unloading of cargo. The contract with BALCO has an integrated rate of Rs. 485 per ton for mining, transportation, loading and unloading. In the case of HINDALCO there are two components in the compensation rate, one for mining and another for transportation. No separate activity of cargo handling is mentioned or rate specified. Obviously the component for transportation will depend on the distance of transportation. But the main activities are that of mining and transportation. By now it is well settled that handling or transportation of goods within a factory or mining area does not amount to cargo handling because at that stage the goods are not cargo within the common meaning of the word. As per records of the case, on the entire component of transportation the receiver of the service has already paid Service tax under the category of services of Transportation of Goods by Road. No separate component of compensation for loading and unloading is seen from the contract. In this respect the contract under consideration is different from the contract considered in the case of Gajanand Agarwal where there was a rate for loading of railway wagons based on the number of wagons loaded. In the contracts under consideration there is a predominant activity of transportation. The cargo handling activity is incidental to transportation. Revenues attempt to convert such services into cargo handling service to deny the abatement available to value of services of Transportation of Goods by Road is too far fetched to find any legal support. It can be seen from clause 4.00 of the contract with HINDALCO that the base transportation charge was fixed at Rs. 588 per ton for a distance of 460 KM. There is no attempt to show that this is an unreasonable rate for transportation, jacked up on account of value of cargo handling included in it. The definition of cargo handling service includes cargo handling incidental to freight. The definition does not specifically include transportation. It specifically excludes mere transportation. So the definition cannot be interpreted to mean that if a transporter who transports goods for 460 KM does loading and unloading also, the service rendered by the transporter will no longer be transportation but cargo handling service. So we see merit in the contention of the Appellants that they were providing services of transportation of goods and not cargo handling service.
5. In view of the above, we find merit in the appeal and same is allowed being covered by the above clarifications of CBE&C and decisions of judicial forum. The appeal is consequently allowed.
(Operative portion of the order pronounced in Court)
(Dr. D.M. Misra) (Raju) Member (Judicial) Member (Technical)
Sinha
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Appeal No. ST/13270/13