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of <h1>Classification of short-distance local transportation with incidental loading/unloading as GTA not Cargo Handling; tax demand set aside</h1> Dominant issue: classification of local short-distance transportation with incidental loading/unloading as either GTA or Cargo Handling Services. ... Classification of service - local short-distance transportation/shifting (with incidental loading/unloading) - to be classified under the category of Goods Transport Agency services or Cargo Handling Services? - HELD THAT:- The issue is no more res-integra in view of the decision of this Tribunal in the case of M/s S.K. Mineral Handling Private Limited Vs. CGST & Central Excise, Bhubaneswar II [2021 (9) TMI 1585 - CESTAT KOLKATA], wherein this Tribunal has observed that 'the demands of Service Tax on transportation charges is not sustainable.' In view of the above decision of this Tribunal in the case of M/s S.K. Mineral Handling Private Limited, the appellant is not liable to pay service tax under Cargo Handling Services. Therefore, the demand of service tax confirmed against the appellant is dropped. The appeal filed by the appellant is allowed with consequential relief, if any. Issues: (i) Whether service tax demand framed on local short-distance transportation/shifting (with incidental loading/unloading) is chargeable as Cargo Handling Services or is taxable as Goods Transport Agency service with liability on the service recipient.Analysis: The issue was examined in light of work orders showing separate rates for transportation and for loading/wagon-loading, the classification tests for Cargo Handling Services and Goods Transport Agency service under the Finance Act, 1994, Rule 2(1)(d)(v) of the Service Tax Rules, 1994, and Tribunal precedents holding that where contracts identify separate services and prescribe separate rates the contracts are divisible. Authorities were applied to conclude that incidental loading/unloading tied to short-distance transportation does not convert a divisible transportation contract into Cargo Handling Services where transportation is the primary activity and separate consideration for loading exists. Reliance was placed on prior Tribunal decisions that transportation for short distances is taxable as transport/GTA service with liability on the recipient and that Circular No. B11/1/2002-TRU does not mandatorily recharacterise divisible contracts into Cargo Handling Services when separate rates/services are specified.Conclusion: The demand of service tax as Cargo Handling Services on local transportation/shifting (with incidental loading/unloading) is not sustainable and is accordingly set aside in favour of the assessee.
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