2014 (12) TMI 244

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....ent of India undertaking registered with the Central Excise Department for the taxable service of storage and warehousing and cargo handling services. The appellant was collecting cargo handling charges as also for CFS transport charges on lump sum basis from their customers for the cargo handling charges rendered by them in respect of containers and discharged Service Tax liability on the full amount. With effect from 16-8-2002, the appellant bifurcated the amounts into CFS transport charges and cargo handling charges and paid Service Tax on the cargo handling charges only. The department was of the view that since the appellant is rendering a composite service and charging a lump sum amount, they were liable to pay Service Tax on the enti....

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....o handling and transportation. It is contended that in many cases, the charges collected towards transportation is less than the cost incurred for the transportation and in a few cases, they have collected from the customers more amounts towards transportation than what was incurred by them. In such cases, on the excess amounts collected by them, they have discharged the tax liability under cargo handling service along with interest thereon. Therefore, on that part of the amount collected towards actual cost of transportation, in view of the Board Circular B-11/1/2002-TRU, the department is not entitled to demand Service Tax. 3.2 The ld. counsel also submits that the activity of the appellant was known to the department as early in ....

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....hile handling of empty containers at Container Freight Station. 4. The ld. Additional Commissioner (AR) appearing for the Revenue on the other hand urges that prior to 16-8-2002, the appellants were collecting lump sum charges for the composite services rendered by them and only from 16-8-2002 they started splitting up of the service charges into cargo handling charges and transportation charges. This is a deliberate attempt on the part of the appellant to avoid Service Tax liability by splitting the charges collected. He also submits that what is permitted to be excluded from the total charges is the actual amounts incurred on transportation, whereas in their letter dated 26-4-2005 the appellant has clearly admitted that the charge....

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....terest and therefore, the question of collecting any tax on excess transportation charges does not arise in the instant case. Tax planning and tax avoidance cannot be considered as illegal/per se. In the instant case, the appellant collected transportation charges and cargo handling charges separately and discharged Service Tax liability on cargo handling charges. This amounts to tax planning and not tax evasion as alleged by the Revenue. Further, the activity of the appellant was made known to the department as early as in March, 2003 and nothing prevented the department in issuing a show cause notice as soon as they came to know of the activity of the appellant. However, the department waited till 3-8-2005 to issue a show cause notice for....