Separate billing of transport and cargo handling charges supported waiver of pre-deposit in a service tax dispute.

Where transport and cargo handling charges were separately shown in bills on an actual basis, and service tax had already been discharged on the cargo handling component, the composite billing was treated as taxable only to the extent of the cargo handling element. Relying on a CBEC circular dated 1 August 2002, CESTAT found a strong prima facie case that transportation charges included in storage and warehousing services and cargo handling services were not separately exigible on the facts presented. On that basis, the applicants were granted waiver of pre-deposit and stay of recovery pending appeal.

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Issues: Whether the applicants were entitled to waiver of pre-deposit and stay of recovery in respect of service tax demand on transportation charges included in storage and warehousing services and cargo handling services.

Analysis: The charges for cargo handling and transportation were shown separately in the bills on an actual basis, and service tax was already being paid on the cargo handling component. A CBEC circular dated 1-8-2002 indicated that where transport and cargo handling services are provided in a composite manner but the charges are separately indicated, tax is leviable only on the cargo handling element. On that basis, a strong prima facie case for waiver was made out.

Conclusion: The applicants were entitled to waiver of pre-deposit and stay of recovery pending the appeal.

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