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2022 (2) TMI 667
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....s being provided by Respondent include arranging for vehicles/containers, loading of goods at the place of Consignor in Gujarat by them, transportation of containerized cargo to Ports, Unloading of containerized cargo at Ports, handling of containerized cargo at Ports including payment of various port charges, loading of containerized cargo in costal vessel by Shipping Companies on behalf of them, transportation of sea route, unloading & handling of containerized cargo at ports by Shipping Companies on behalf of them, delivery of empty containers to Shipping Companies after the goods are unloaded at the place of Consignee which may not be classified under GTA. The said services suitably classified as Cargo Handling Service prior to the period 01.07.2012 and handling of cargo other than GTA after the period 01.07.2012. The impugned show cause notice proposed the service tax demand of Rs. 5,83,58,364/- along with interest and penalty. It was also proposed imposition of penalty upon the Directors Shri Pranav V. Hindocha and Shri Mahesh J. Der, under the provisions of Section 77(1)(C) and 78 of the Finance Act 1994. 1.1 The adjudicating authority dropped the demands vide OIO No. BVR....
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.... mere transpiration of goods. Mere Transportation of goods by road is covered under 'Goods Transport Agency Service'. Service provider who provide composite service like packing, loading, unloading with transportation of goods are classified under Cargo Handling Service or Goods Transport Agency Services depending their essential or predominant character of the service provided. The Adjudicating authority failed to appreciate that the matter does not only pertain to the Goods Transported by Road, but several activities have been carried out by them. The Adjudicating authority has further erred in holding that the assessee was acting as a pure Agent in this case without any value addition and had fulfilled all the condition laid down under Rule 5 (2) of Service tax (Determination of Value) Rules, 2006 on the ground that actual receiver of Service by the shipping lines is the Consignor or Consignee and the assessee acted as pure agent and therefore, it becomes a revenue neutral case wherein the service tax has been charged by the shipping line and the same has been paid. The assessee was not acting as 'Pure Agent' of their customers as there was not contractual agreement between the ....
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....ode of transport. It means services of loading, unloading and handling of cargo whether in container or otherwise may merit classification under the said category irrespective of fact of mode of transportation, but by any means transportation of goods in container whether road and / or sea cannot be classified under the cargo handling service. It is clearly evident from the invoices that respondent had charged for road transportation and reimbursed the actual amount for sea transportation paid to shipping line on behalf of recipients of service either consignor or consignee. Thus not provided any service of Cargo Handling Service as defined under the Finance Act, 1944. For the purpose of classifying the activities under "Cargo Handling" one must provide service of loading, unloading, packing or unpacking of cargo, cargo handling service provided for freight in special container or for on containerized freight, service provided by a container freight terminal or any other freight terminal, for all modes of transport, cargo handling service incidental to freight, service of packing together with transportation of cargo or goods, with or without one or more of other services likes loa....
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....h the concept of levy of service tax based on classification of service under Section 65A is dis-away with effect from 01.07.2012, principles of interpretation of specified description of service or bundled service were incorporated under Section 66F of the Finance Act, 1944 w.e.f. from 01.07.2012 He also invites attention towards clarification issued by CBIC vide Circular No. 165/16/2012-ST dated 20.12.2012. Thus, for the purpose of registration and payment of service tax same classification were continued, therefore, it cannot be said that there is not category of classification is available and there cannot be two different criteria for classification of service, Registration and payment of Service tax and levy of Service tax. There was no change in the definition of "Goods Trnasport Agency" as well as levy & payment of service tax on GTA prior to 01.07.2012 and w.e.f 01.07.2012. The Respondent had not only raised consignment Note/Truck Loading Slips/ Lorry Receipts bearing Serial Number, date, consignor's name, consignee's name, from to, back to, container number, seal number, name of transport, truck number, weight etc but also raised invoice for road transport freight, LR num....
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....s. Commissioner of Central Excise, Thane-II 2015 (37) STR 1043 (Tri. Mumbai) ? (iii) Whether arrangement of services of Coastal Sea Transportation of Containerized Cargo and/or Handling of Cargo at load port and discharge port on payment of such amount on behalf of recipient of service on actual reimbursement basis can be considered as cost incurred by the respondent in the capacity of "Pure Agent" within the meaning of Explanation 1. To sub-rule (2) of Rule 5 of Service Tax (Determination of Value) Rules, 2006? (iv) Whether such cost or expenditure viz. payment towards transportation and handling charges incurred (after 2012-13 to 2014-15) can be included in the value as provided under Rule 5(1) of the Service Tax (Determination of Value) Rules, 2006 for the purpose of charging service tax while providing taxable service of Goods Transport Agency and covered by the decision of Hon'ble High Court of Delhi and Hon'ble Apex Court in the case of Intercontinental Consultants & Technocrats Pvt. Ltd. as reported in 2013(29) STR 9 (Del) and 2018 (10) GSTL 401 (SC)? (v) Whether extended period as provided under Section 73 of the Finance Act, 1994 can be invoked just merely....
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....ner or otherwise may merit classification under the said category irrespective of fact of mode of transportation but by any means transportation of goods in container whether by road and/or sea cannot be classified under the Cargo Handling Service. It is a fact on record that respondent had provided services of transportation of goods by road in a container in the capacity of 'Goods Transport Agency' and arrange services of handling of cargo at load port and dispatch port as well as sea transportation on reimbursement of amount on actual basis from recipient of services. 6.2 On this issue, the board had issued a clarification No.B.11/1/2002-TRU dated 01.08.2002, the relevant para of the said clarification are reproduced below:- "2. As per clause (21), the term "cargo handling service" means loading, unloading, packing or unpacking of cargo and includes cargo handling services provided for freight in special containers or for non-containerised freight, services provided by a container freight terminal or any other freight terminal, for all modes of transport, and any other service incidental to freight, but does not include handling of export cargo or passenger baggage o....
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....-clause which provides the most specific description shall be preferred to sub-clauses providing a more general description; (b) composite services consisting of a combination of different services which cannot be classified in the manner specified in clause (a), shall be classified as if they consisted of a service which gives them their essential character, insofar as this criterion is applicable; (c) when a service cannot be classified in the manner prescribed in clause (a) or clause (b), it shall be classified under the sub-clause which occurs first among the sub-clauses which equally merit consideration. In the present case, the Goods Transport Agency and/or services in relation to transport of coastal goods are more specific service therefore, import classifiable under clause (zzp) of Section 65(105)- Goods Transport Agency read with Section 65(50b) of the Finance Act, 1994 and clause (zzzzl) & (zr) of Section 65 (105) "Transportation of Coastal Cargo" and "Cargo Handling Service" is general one. Therefore, services provided by respondent are rightly merit classified under GTA. We further find that even if it is presumed that services provided by the resp....
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....te service, even if it consists of more than one service, should be treated as a single service based on the main or principal service and accordingly classified. While taking a view, both the form and substance of the transaction are to be taken into account. The guiding principle is to identify the essential features of the transaction. The method of invoicing does not alter the single composite nature of the service and classification in such cases are based on essential character by applying the principle of classification enumerated in section 65A. Thus, if any ancillary/ intermediate service is provided in relation to transportation of goods, and the charges, if any, for such services are included in the invoice issued by the GTA, and not by any other person, such service would form part of GTA service and, therefore, the abatement of 75% would be available on it. 4. Issue 2: GTA providing service in relation to transportation of goods by road in a goods carriage also undertakes packing as an integral part of the service provided. It may be clarified whether in such cases service provided is to be classified under GTA service. Clarification: Cargo handling s....
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...., or it will fall under the category of 'convention services' and charged to service tax. Between the two competing categories, in this case, the more specific one would be that of a 'convention service' since a 'mandap keeper' includes official, social as well as business functions whereas a 'convention service' covers conventions only which is like an official function. Hence in this case the service would not be exempt from service tax. 4. Similarly, in each case where such problems arise the proper Central Excise officer has to decide on merits as to which is the more specific category and charge tax accordingly." In view of the above clarification, in the instant case even if, entire transaction is to be considered as a composite service then also the form and substance of the transaction is in the nature of transportation of goods by road and sea and not handling of cargo by any means therefore, activities carried out by the respondent cannot be considered as Cargo Handling Service. 6.5 We find that the revenue has failed to take note of clarification issued by CBIC Circular No.B.11/1/2002-TRU dated 01.08.2002 which reads as unde....
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....by this Tribunal in the case of UNITED SHIPPERS LTD. vs COMMISSIONER OF CENTRAL EXCISE, THANE-II- 2015 (37) STR 1043 (Tri.-Mumbai) and by following various decisions, it was held that when the cost of transportation is shown separately in the invoice, no service tax can be demanded on such component of value. The said decision of the tribunal was upheld by the Hon'ble Apex Court and department's Civil Appeal was dismissed as reported in COMMISSIONER Vs. UNITED SHIPPERS LTD.- 2015 (39) S.T.R. J369 (SC). The tribunal while holding the same has placed reliance upon decision of tribunal as well as CBIC Circular (supra). 6.7 In view of the above decision, which has attained finality as upheld by the Hon'ble Supreme Court the same being binding upon all the ratio of the decisions and clarification is squarely applicable in the present case. As regard the period after 01.07.2012, though, practice of levy of service tax based on classification of service was departed and service was defined under Section 65B(44) of the Finance Act, 1994. The levy of service tax was under Section 65B of the Finance Act, 1994 on the value of all services other than specified in the negative list. The nega....
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....nd opt for relevant description/s from the list of 120 descriptions of services given in the Annexure. If any applications for amendment of ST-1 are pending with field formations, seeking the description 'all taxable services', such amendment may not be necessary and the officers in the field formations may provide necessary guidance to the taxpayers in this regard. Directorate General of Systems will be making necessary arrangements for display of the list of 120 descriptions of services and their corresponding Accounting Codes in Form ST-1 and Form ST-2 as may be necessary." As per the above clarification for the purpose of registration and payment of service tax same classification which were prevalent from 01.07.2012 were continued from 01.07.2012 therefore, it cannot be said that there is no category of classification available and there cannot be two different criteria for classification of service, registration and payment of service tax and levy of service tax. Even ratio of clarifications issued by the CBIC and settled position of law in Para (supra) for the period prior to 01.07.2012 is equally applicable after 01.07.2012 for the purpose of classification of ac....
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....ort Agency Service and goods were transported with the help of truck owned by others as well as its own trucks. They also engaged in provision of service of transportation of goods by road in their own trucks. It is also a fact that they had provided service of transportation of goods in container by road only without handling of goods/cargo to the consignee or consignor as the case may be. The consignee/consignor were many times selecting the shipping lines from particular ports in Gujarat and shipping lines provided, services of sea transportation, handling of cargos at load port as well as discharge port. In the initial two years of period under dispute, the respondent provided services of transportation of goods by road/GTA from consignor's premises to load port and from dispatch port to consignee's port in certain cases only. Thus, the role of the respondent was limited to transportation of goods by road/GTA from consignor's premises to load port only, goods were unloaded at the consignee's premises by the consignee only therefore, in this fact the respondent had provided service of transport agency only prior to 01.07.2012 and also after 01.07.20102. 6.11 We find that ther....
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....voice, a bill or, as the case may be, a challan shall include any document, by whatever name called, which shall contain the details of the consignment note number and date, gross weight of the consignment and also contain other information as required under this sub-rule: RULE 4B. Issue of consignment note. ---Any goods transport agency which provides service in relation to transport of goods by road in a goods carriage shall issue a consignment note [to the recipient of Service]: Provided where any taxable service in relation to transport of goods by road in a goods carriage is wholly exempted under section 93 of the Act, the goods transport agency shall not be required to issue the consignment note. Explanation. - For the purposes of this rule and the second proviso to rule 4A, "consignment note" means a document, issued by a goods transport agency against the receipt of goods for the purpose of transport of goods by road in a goods carriage, which is serially numbered, and contains the names of the consignor and consignee, registration number of the goods carriage in which the goods are transported, details of the goods transported, details of the pla....
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....ent but had doubted about fulfillments of conditions as stipulated in Rule 5(2) of Service Tax (Determination of Value) Rules, 2006. Especially, on existence of written contractual agreement, we find that as discussed in above paras the respondent had acted as pure agent of the consignor or consignee as the case may be and fulfilled all the conditions of the said rules. Only because of same containers were transported by sea in the vessel by other service provider and payment of sea transportation received by them against the invoice raised by them for reimbursement of actual basis, it cannot be said that it had not provided service of transport of goods by road. It is also not disputed that the respondent were registered as service provider under the category of Goods Transport Agency and paying service tax wherever payable by them under the Finance Act, 1994. In the registration, there is no mention of either cargo handling service or they had not provided any service of cargo handling nor transportation of goods by sea, etc. 6.14 We find that the respondent for providing services of Goods Transport Agency had raised invoice of the amount showing for road transportation and ot....
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....ient of service shall be excluded from the value of taxable service. If all the following conditions are satisfied namely,- (i) The service provider acts as a pure agent of the recipient of service when he makes payment to third party for services procured. (ii) the recipient of service receives and uses the services so procured by the service provider in his capacity as pure agent of the recipient of service; (iii) the recipient of service is liable to make payment to the third party; (iv) the recipient of service authorises the service provider to make payment on his behalf; (v) the recipient of service knows that the service for which payment has been made by the service provider shall be provided by the third party; (vi) the payment made by the service provider on behalf of the recipient of service has been separately indicated in the invoice issued by the service provider to the recipient of service; (vii) the service provider recovers from the recipient of service only such amount as has been paid by him to the third party; and (viii) the services procured by the service provider from the third party as a....
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....and made payment to third party for the services procured; (ii)Consignor or Consignee had received and used the services of sea transportation etc. from shipping line so procured by it in its capacity as pure agent of them, (iii)Consignor or Consignee as the case may be was liable to make payment to the third party i.e. shipping line; (iv) Consignor or Consignee had authorized it to make payment on their behalf to shipping line; (v) Consignor or consignees were knowing that the services for which payment has been made by the service provider shall be provided by the third party shipping line; (vi)The payment made by it on behalf of consignor or consignee was separately indicated in the invoices issued by them to consignor or consignee; (vii)It had recovered from consignor or consignee only such amount as has been paid by it to the shipping line; and (viii)The services procured by it from the third party as a pure agent of consignor or consignee were in addition to the services viz. goods transport agency provided by it on its own account. From the above, it is clear that the respondent had acted as a pure agent....
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....remuneration/commission would nevertheless include expenditure incurred by the assessee providing the services; that all incidental charges for running of the business would also form part of the remuneration or Commission (by whatever name called). The phrase "by whatever name called" must necessarily have some link or reference or nature to the receipt of remuneration or commission. Thus, if a receipt is for reimbursing the expenditure incurred for the purpose, the mere act of reimbursement, per se, would not justify the contention of the Revenue that the same, having the character of the remuneration or commission, deserves to be included in the sum amount of remuneration/commission. 8. As per Rule 6(8) of Service Tax Rules, 1994, the gross amount referred to therein would apply to receipts of such sum, which would bear the character of remuneration or commission, in that, the said sum is brought under the head "receipts"." • SAI SHIPPING SERVICES - 2011 (22) STR 153 (Tri. Del.) "8. After appreciating the submissions made by both sides, we reproduce paras 2.4 and 2.5 from the Board Circular No. B/43/1/97- TRU dated 6-6-1997 :- "It is clari....
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....ala fide on their part and if the 15% of the exempted amount charged, resulting in less duty payment on them, there is no warrant in imposing penalty under Sections 76 and 78 of the Finance Act. As such, the impugned orders imposing penalties on them and enhancing the penalty upon them are set aside. Both the appeals are disposed of in the above terms." 6.17 We find that as per the undisputed fact, the service of handling containers at load ports, transportation of containers by vessel from one port of India to another port of India and handling of containers at discharge ports was done by shipping line only. The payment of sea freight handling charges as discussed in paras (Supra) on behalf of the clients to the shipping line and reimbursement on actual basis is not under dispute. The respondent has not made any provision of service of transportation of goods by sea and handling of cargo at load port and discharge port. It is also a fact that no consideration for such service to whatever amount received by them was reimbursement of the actual amount paid to shipping line on behalf of the recipient of service. For the purpose of levy of service tax there must be a provision of s....