Custom, Excise & Service Tax Tribunal
Sapphire Container Cargo vs Visakhapatnam-I on 1 October, 2019
(1) Appeal No. ST/3018/2011
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH AT HYDERABAD
Division Bench - Court - I
SERVICE TAX APPEAL No. 3018/2011
(Arising out of Order-in-Original No44/2011 (MP), dated 29.08.2011 passed by
Commissioner of Central Excise, Customs & Service Tax, Visakhapatnam-I)
Sapphire Container Cargo .. APPELLANT
48-7-52, Sapphire Avenue,Srinagar,
Ramatalkies Dn. Old Vegetable Market Lane,
VISAKHAPATNAM - 530 016.
Andhra Pradesh
Vs.
Commissioner of Central Excise .. RESPONDENT
Customs & Service Tax, Visakhapatnam-I
Central Excise Bhavan,
Port Area,
VISAKHAPATNAM - 530 035.
Andhra Pradesh
APPEARANCE:
ShriN.V. RamanaRao, Advocate for the appellant
ShriP.S. Reddy, Deputy Commissioner/AR for the respondent
CORAM: HON'BLE Mr. P.V. SUBBA RAO, MEMBER (TECHNICAL)
HON'BLE Mr. P. DINESHA, MEMBER (JUDICIAL)
FINAL ORDER No. A/30566/2019
DATE OF HEARING: 17.09.2019
DATE OF DECISION: 01.10.2019
[ORDER PER: Mr. P. DINESHA)
1. The appellant is registered with Central Excise Department for
providing Business Auxiliary Service, Goods Transport Agency Service,
Railway Containerised Freight Service and Cargo Handling Service and it
appeared to the Revenue, on verification of records, that the assessee is
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engaged in the activity of loading, transport and unloading of cargo through
road, Rail (containers), Road-cum-Rail to different service receivers under
composite contracts and accordingly issued a show cause notice dated
22.10.2009 proposing to demand Rs. 1,99,46,117/- being the service tax
including Cesses for the period 2004-05, 2005-06, 2006-07, 2007-08 and
2008-09, apart from applicable interest and penalty. In adjudication, the
original authority - Commissioner vide Order-in-Original 29.08.2011, inter-
alia, upheld the proposed demand, however to the extent of Rs.
1,72,74,961/-, appropriated the amount already paid and also charged
applicable interest along with the applicable penalty. Ld. Commissioner
passed order after analyzing the facts as well as explanation offered, in
terms of his discussions vide paras 22 to 24 of his order. Being aggrieved
by the above order, the assessee has filed the above appeal before this
forum.
2. It is the submission of the appellant through its Advocate Shri N.V.
RamanaRao that the appellant is primarily a transporter of goods and handle
very few cases of loading and unloading activities which were incidental to
its activity of being a Goods Transport Agency. It was also submitted that
the appellant was basically a transporter of goods utilising the facilities of
rail required for transportation of goods and in turn they utilise the services
of M/s Container Corporation of India (CCI for short) and Boxtrans Logistics
(I) Services Pvt. Ltd. for movement of consignments in their containers
through rail and it is the other parties who transport as well as handle the
cargo within their terminal. It is only thereafter that the appellants engage
trailers for transporting the consignments for door delivery/pick up with no
activity of loading whatsoever. Ld. Counsel also submitted that in all the
contracts referred to by the adjudicating authority, the same are very clear
(3) Appeal No. ST/3018/2011
that it was for carrying out the transportation of goods per se and even in
the invoices there is no separate charge for loading and unloading, nor was
it there in the contracts.
3. Per contra, Ld. DR Shri P.S. Reddy appearing for the Revenue
reiterated the findings of the adjudicating authority.
4. We have heard the rival contentions and perused the records and
Section 65(23) of the Finance Act, 1994 "Cargo Handling Service" to mean
"loading, unloading, packing or unpacking of cargo and includes cargo
handling services provided for freight in special containers or for non-
containerised freight, services provided by a container freight terminal or
any other freight terminal, for all modes of transport and cargo handling
service incidental to freight, but does not include handling of export cargo or
passenger baggage or mere transportation of goods." Section 65(105)(zr)
defines "Taxable service" means any service provided or to be provided to
any person, by a cargo handling agency in relation to cargo handling
services." Further, CBEC vide circular F.No. B.11/1/2002-TRU, dated
01.08.2002 mentioned clearly that if a lump sum is charged for both
transportation and cargo handling, the tax is leviable on the entire amount
and on the other hand if the invoice indicates the amount charged towards
cargo handling and transportation separately on actual basis, then the tax is
leviable only on the cargo handling charges. The assessee's contention is
that the services rendered by them are of transportation only and not cargo
handling services and they justify quoting the contract which is for
transportation of goods per se and not to provide cargo handling services.
They further contend that for transportation of goods, they are required in
some cases to load and unload which ipso facto does not mean that a freight
transporter would be subjected to service tax under cargo handling services
(4) Appeal No. ST/3018/2011
and they also further contend that loading and unloading was done by
independent contractors like CCI etc. and they have never undertaken the
activity of loading and/unloading.
5. From the definition of "Cargo Handling Services" (supra) what
emerges is that mere transportation of cargo is excluded and there is no
doubt that a freight activity of service of transportation of goods will surely
be included some manner of loading and unloading of goods.
6. We find that the assessee themselves do not carry out the activities
of loading and unloading per se which are claimed to be carried out by
independent contractors. We also note that Board vide Circular No.
104/7/2008-ST, dated 06.08.2008, the following clarifications were issued.
"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
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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) and F. No. 334.1/2008-TRU dated
29.2.2008 (para 3.2 and 3.3), 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 65 A. 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."
Later on, vide another clarification dated 05.10.2015, the matter was
further clarified, in the following manner :
"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
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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 66 F of the Finance Act,
1994. Thus, if ancillary services areprovided 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-ST dated 20.06.2012, 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."
7. On harmonious reading of the above clarification of CBEC vis-à-vis
the facts borne out on record, it is clear that the contracts apparently did not
have significant component of Cargo handling other than transportation
though a small component of loading and unloading cannot be ruled out.
But, however, no separate activity of cargo handling is mentioned nor the
rate specified and even the invoices placed on record do not specifically
charge for cargo handling nor for loading and unloading. The cargo handling
activity alleged by the Revenue is perhaps incidental to the activity of
transportation and Revenue's attempt to convert such activities into cargo
handling service, in our view, is too far fetching.
8. In view of the discussions herein above, we are of the considered
view that the services provided by the appellant cannot be brought under
the purview of cargo handling services. The allegation against the assessee
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on this score cannot sustain and consequently the impugned order will have
to be set aside which we hereby do so.
ORDER
9. Appeal No. ST/3018/2011 filed by the assessee is allowed with consequential benefits, if any, as per law.
(Pronounced in open court on 01.10.2019) (P. VENKATA SUBBA RAO) MEMBER (TECHNICAL) (P. DINESHA) MEMBER (JUDICIAL) Vrg