Court affirms refund denial for terminal handling charges under service tax law

The court upheld the decision of the Commissioner (Appeals) regarding the refund claim of service tax paid on goods transport agency service and handling charges at the port. It was held that terminal handling charges are not eligible for a refund, as they fall under "business auxiliary service" and are not covered by the exemption notification. However, container handling charges were deemed eligible for a refund as they are classified under port services. The court rejected the Revenue's appeal and affirmed the Commissioner (Appeals) decision, finding no issues with the ruling.

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Issues involved:
Refund claim of service tax paid on goods transport agency service and handling charges at port under the Central Excise Tariff Act, 1985.

Analysis:
The appeal was filed by the Commissioner of Central Excise, Ahmedabad-II concerning M/s. Sagar Drugs & Pharmaceuticals' refund claim of Rs. 12,931 for service tax paid on services of goods transport agency service and handling charges at the port. The original adjudicating authority sanctioned a refund of Rs. 5,606 for custom house agent service but rejected Rs. 3,919 for GTA service. The respondent filed a memorandum of cross objection, arguing that TMC charges fall under port service and should be eligible for a refund. However, it was found that terminal handling charges are classified under "business auxiliary service" and are not covered under the exemption notification. The notification did not specify these services as eligible for refund during the relevant period from April 2009 to June 2009.

Regarding container handling charges, the Commissioner (Appeals) held that they are covered under port services and eligible for refund as port services were exempted under Notification No. 41/2007-S.T. The judgment agreed with the Commissioner (Appeals) that terminal handling charges were not eligible for a refund as they were exempted under Notification No. 17/2009-S.T. from July 7, 2009, onwards. The notification specified that service tax on terminal handling charges under any sub-clause of Section 65(105) is exempted, making the tax paid on such charges refundable. The refund claim for transport of goods under Section 65(105)(zzp) was rejected, upholding the impugned order.

In conclusion, the judgment rejected the appeal filed by the Revenue and upheld the order of the Commissioner (Appeals) without finding any infirmity in the decision. The pronouncement was made in court on December 15, 2011.

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