2018 (3) TMI 631 - AT - Service Tax

Tribunal dismisses service tax liabilities on Cargo Handling & Business Auxiliary Services, upholds liability for Goods Transport Agent.

Flyjac Logistics Versus Commissioner of GST And C. Ex, Chennai South Commissionerate

Flyjac Logistics Versus Commissioner of GST And C. Ex, Chennai South Commissionerate - TMI Issues:1. Service tax liabilities on Cargo Handling Service, Business Auxiliary Service, and Goods Transport Agent Services for a specific period.2. Reversal of certain cenvat credit.3. Imposition of penalties under Section 76 & 78 of the Finance Act, 1994.Analysis:1. Cargo Handling Service and Business Auxiliary Service Tax Liability:The appellant contested the service tax liabilities on Cargo Handling Service and Business Auxiliary Service. The appellant's core activities were consolidation and freight forwarding, not physical cargo handling. Various charges collected were explained, such as collect fee, currency adjustment factor, delivery order fee, courier charges, break bulk fee, freight income, and transportation charges. The Tribunal found that these charges did not involve physical handling of cargo. The impugned order wrongly attributed these charges to cargo handling services without evidence of physical cargo handling. Thus, the service tax liability on Cargo Handling Service was dismissed. Regarding Business Auxiliary Service tax liability on incentives received from liners, the Tribunal referred to a previous case and ruled in favor of the appellant, stating that this was a profit on freight booking, not business promotion. Hence, the service tax liability on Business Auxiliary Service was also rejected.2. GTA Service and Cenvat Credit Reversal:The appellant did not contest the service tax liability for Goods Transport Agent (GTA) service and the denial of credit on various input services. They had already paid the liabilities and reversed the credit before the show cause notice was issued. The appellant requested the invocation of Section 80 to waive the penalties, which was granted by the Tribunal. The Tribunal noted that interest on delayed reversal of credit, if applicable, should be paid by the appellant upon verification by the authorities.3. Penalties Imposed:Considering the facts and circumstances, the Tribunal invoked Section 80 of the Finance Act, 1994, to waive the penalties imposed on the appellant for GTA service and ineligible cenvat credit. The appeal was partly allowed based on the findings, with penalties waived as per Section 80. The decision was dictated and pronounced in court.In conclusion, the Tribunal dismissed the service tax liabilities on Cargo Handling Service and Business Auxiliary Service, granted waiver of penalties under Section 80 for GTA service and cenvat credit reversal, and directed the appellant to pay interest on delayed reversal of credit if applicable.