2025 (3) TMI 847 - AT - Service Tax

Goods Transport Agency Service classification upheld over Cargo Handling Services for loading unloading activities under Section 65A(2)(v)

CESTAT NEW DELHI allowed the appeal, holding that the appellant's services were classifiable as Goods Transport Agency Service rather than Cargo Handling ... Classification of services - Cargo Handling Services or Goods Transport Agency Service? - HELD THAT:- It appears that loading, unloading and packing or unpacking of cargo including freight special container. The main emphasis is on the ‘cargo’ and not ‘transportation’. The decisions cited by the learned counsel for the appellant also lays stress on the main activity to classify the service under CHS or under GTA, however if the loading or unloading in the truck is a part and parcel of the Transportation of Goods Services it is an incidental/ancillary activity and the same is classifiable under GTA. In the case Dalveer Singh (supra), the Tribunal was concerned with the issue whether the activity undertaken by the appellant, i.e. transportation of material from railway station to the warehouse is covered under CHS or not. Relying on the Board’s Circular dated 01.08.2002 clarifying that mere transportation of goods is excluded from the purview of CHS, allowed the appeal in favour of the assessee. In the case of Hira Industries Ltd. [2012 (4) TMI 430 - CESTAT, NEW DELHI], the learned Members observed that when there is composite service which has elements fitting into the definition of both the services, recourse should be taken to Section 65A(2)(v) providing the test of most specific description to be adopted. In light thereof, it was held that transportation is not for the purpose of loading and unloading but the contrary is true i.e. loading and unloading is for transportation and therefore any person dealing with the situation perceives the services as one for transport and not for loading and unloading. Later in the case of Bhadoria Transport Co. [2014 (3) TMI 304 - CESTAT KOLKATA], the Tribunal considered the Board’s Circular dated 06.08.2008 clarifying that transportation is not the essential character of CHS but only incidental to the CHS and in that even the services shall be treated as GTA services and not CHS. Conclusion - The main activity which the appellant performed was of transportation of goods which is classifiable under the GTA as defined under Section 65B(26) and the activity of loading and unloading the goods is only ancillary. The impugned order is therefore set aside. The appeal is accordingly allowed. ISSUES PRESENTED and CONSIDEREDThe core legal issue under consideration is whether the services provided by the appellant, classified as 'Cargo Handling Services' (CHS), should instead be classified as 'Goods Transport Agency Services' (GTA) under the Finance Act, 1994. This classification determines the applicability of service tax for the period from March 2013 to March 2016.ISSUE-WISE DETAILED ANALYSISRelevant legal framework and precedents:Under Section 65(23) of the Finance Act, 1994, 'cargo handling service' is defined to include loading, unloading, packing, or unpacking of cargo, but excludes mere transportation of goods. Section 65B(26) defines 'goods transport agency' as any person providing service related to the transport of goods by road and issuing a consignment note.The appellant argued that their services were primarily transportation, thus falling under GTA and not CHS. They relied on several Tribunal decisions, including Dalveer Singh, Hira Industries Ltd., and Bhadoria Transport Co., which emphasized that transportation services should be classified under GTA if loading and unloading are merely incidental to transportation.Court's interpretation and reasoning:The Tribunal examined the nature of the services provided by the appellant, focusing on whether the primary activity was transportation or if it included substantial cargo handling. The Tribunal considered the definitions and prior decisions, emphasizing the main activity's nature to determine the appropriate classification.Key evidence and findings:The appellant presented sample invoices and a letter from FTCPL, which referred to the services as 'Transportation Services.' The agreement between the appellant and FTCPL detailed the transportation terms, including rates and conditions, which primarily focused on transportation, with loading and unloading as ancillary activities.Application of law to facts:The Tribunal applied the definitions from the Finance Act and the principles from prior decisions to the facts, determining that the appellant's primary service was transportation. The ancillary nature of loading and unloading supported classification under GTA.Treatment of competing arguments:The Department argued that the appellant's services included substantial cargo handling, thus classifying them under CHS. However, the Tribunal found that the primary intent and execution of the services were transportation, with loading and unloading as incidental activities, aligning with the GTA classification.Conclusions:The Tribunal concluded that the appellant's services were primarily transportation, classifiable under GTA, with loading and unloading as ancillary activities. Therefore, the service tax demand under CHS was not applicable.SIGNIFICANT HOLDINGSThe Tribunal held that the main activity performed by the appellant was transportation of goods, classifiable under GTA as defined under Section 65B(26) of the Finance Act, 1994. The Tribunal emphasized that loading and unloading were ancillary to transportation, not constituting CHS.Verbatim quote: 'The main activity which the appellant performed was of transportation of goods which is classifiable under the GTA as defined under Section 65B(26) and the activity of loading and unloading the goods is only ancillary.'The Tribunal set aside the impugned order, allowing the appeal and confirming that the appellant's services were not subject to service tax under CHS.