TaxTMI 
TaxTMI 
2024 (4) TMI 1038
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....s to their own godowns and also managing the transportation & delivery of the said goods from the godowns to Company's various dealers, stockists and to the individual customers as per the instructions issued by the company. At times, they also managed the transportation of the goods (Freight Forwarding) directly from Railway Siding to the Customer's end. 2.2 To carry out the above activities, the assessee entered into two agreements. One as 'Handling Agent Agreement' dated 28.05.2015 and the other as 'Transport Agreement' dated 28.05.2015. 2.3 As per the 'Handling Agent Agreement' scope of work is as under:- "B. The Company requires an agent i. To handle the arrival of the material such as unloading, loading, security, etc. at Rake point/Railway siding/Railway platform and subsequently to transport the material from rake point/railway siding/Railway Platform to the respective Godowns. ii. To take care of Cement handling at the Company's Godown as Specified in this Agreement. C. The Handling Agent is having necessary professional experience, expertise, resources, man power and infrastructure to carry out the handling work and is also having all necessary permits, lice....
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.... already discharged applicable service tax under reverse charge in accordance with the provisions of Finance Act and Rules. * Similar is stated in CBEC Circular B-11/1/2002/TRU dated 01.08.2002. * The extended period of limitation is not invokable in the present case on account of the fact that the M/s UTCL was discharging service tax under the reverse charge and also the question involved interpretation of law. Further, the whole exercise would also be revenue neutral in view of available credit to the M/s UTCL on the service tax paid by the Appellant. Accordingly, the demand for January, 2013 to March 2013 was also pleaded to be time barred. 3.4 Learned Departmental Representative reiterated the findings of the impugned order. 4.1 We have considered the impugned order along with the submission made in appeal and during the course of arguments. 4.2 Demand has been confirmed against the appellant both on merits and by holding that extended period of limitation would be invokable in the present case. For holding against the appellant on merits the impugned order records the findings as follows: "The issue is to be decided whether service tax is payable by the Noticee on amo....
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....ifferent destinations in terms of per metric tons in unit i.e. the Noticee has been given at the fixed rate (Rs. per metric ton) for different destinations which has been decided in the agreement. In addition to this consideration, the Noticee has received Rs.12/- per metric ton as service charges which is clearly mentioned in the Annexure-l of the Handling Agent Agreement. Now coming to the contention of the Noticee that they have provided GTA Service to M/s UTCL and M/s UTCL has paid Service Tax on the amount of "Freight Reimbursement" under reverse charge mechanism. However, I do not find any merit in the contention of the Noticee for following reasons. The Noticee is charging some extra consideration as "Service Charges" over and above of transportation charges. As per Section 658(26) a "Goods Transport Agency" means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called. Goods Transport Agent issues consignment note / Invoice / Bill containing all its particulars i.e. the amount contains all cost including profit also. They never issue separate invoice/ bill for their service charges consisting their p....
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....condary transportation is a part and parcel of clearing and forwarding agent service rather of GTA service. The claim of Noticee is also examined via-a-vis definition of Clearing &Forwarding Agent Services as quoted below:- Section 65(25) of the Finance Act, 1994 provides the definition of Clearing &Farwarding Agent Service as below:- (25 ) "clearing and forwarding agent" means any person who is engaged in providing any service elther directly or indirectly, connected with the clearing and forwarding operations in any manner to any other person and includes a consignment agent. On plain reading of the above definition, I find that in the definition the expression 'directly or indirectly' has been used to cover all cases where the service provider deploys other person for some of the functions coming under the service. As discussed at the previous pages; the Notice has carried out following functions:- (i) Clearing:- means goods were cleared from the premises wherein it was sent to them for lifting i.e.(in this case from railways station or siding) upto the Clearing &Forwarding Agent's premises / M/S UTCL's warehouse. (ii) Forwarding:- means arranging further transportatio....
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....lways due to non loading .of goods stored at platform within time i.e not cleared the platform within stipulated time limit. As for as the Noticee's contention that they have received the 'Miscellaneous Expense reimbursed' from M/S UTCL for the amount paid for demurrage and wharfage to railways on behalf of M/S UTCL and this amount is not taxable as they have received this amount from M/S UTCL as reimbursement of expenditure which they have paid to railways in the capacity of pure agency. I do not find any merit in the contention of the Noticee. In this regard I would like to reproduce the Section 67 of the Finance Act, 1994:- SECTION [67., Valuation of taxable services for charging service tax- (1) ..... In view of explanation to Section 67, consideration includes reimbursable expenditure also for the purpose of valuation of taxable service. Therefore, the amount of reimbursement received by the Noticee as 'Freight reimbursed' and 'Miscellaneous Expense Reimbursed' should be included in the taxable value for the purpose of payment of service tax. Further, I want to reproduce the relevant provisions of the Service Tax (Deterrmination of Value) Rules, 2006 as amended RUL....
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....ubserve and its design and the context. In which it is enacted. If the object of a law is to be defeated non-compliance with it, it has to be regarded as mandatory. But when a provision of law relates to the performance of any public duty and the invalidation of any act one is disregard of that provision causes serious prejudice to those for whose benefit it is enacted and at the same time who have no control over the performance of the duty, such provision should be treated as directory one. Where, however, a provision of law prescribes that a certain act has to done in a particular manner by a person in order to acquire a right and it is caupled with another provision which confers an immunity on another when such act is not done in that manner, the former has to be regarded as a mandatory one. A procedural rule ordinarily should not be constructed as mandatory if the defect in the act done in pursuance of it can be cured by permitting appropriate rectification to be carried out at a subsequent stage unless by according such permission to rectify the error later on, another rule should be contravened Whenever a statute prescribes that a particular act is to be done in a particula....
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....served that whenever the gross amount charged for providing any service is inclusive of Service Tax, then the benefit of cum-tax-value is available to the Noticee. In the instant case, the Noticee has claimed that they have not charged the Service Tax on the amount received by them towards freight reimbursed and hence benefit of cum-tax-value should be available to them. However, in this regard, I find that the Noticee has not substantiated its contention with concrete documentary evidences such as all the invoices issued in respect of freight reimbursed. Further, the Noticee has also failed to prove that the Service Tax has not been collected by way of Debit / Credit Notes from the recipients of service. In absence of the documentary evidences, I am unable to appreciate this contention of the Noţicee and accordingly I dismiss the same. In this regard , I would like to reproduce the relevant para of the judgement given by the Hon'ble Allahabad High Court Bench in the case of U.G.SUGAR &INDUSTRIES LTD. Vs., COMMISSIONER OF CENTRAL EXCISE. MEERUT-// which is as below:- "Once the defence was raised by the appellants, it was essentially for the appellants to lead necessary evi....
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..... 4.5 The dispute in this case is for the inclusion of freight amount in the value of C & F service for which a separate agreement has been entered into with the principal, which we do not consider legally tenable. In the case of Gunesh India Pvt. Ltd [(2023) 6 Centax 58 (Tri.-Del)] in similar type of arrangement with M/s Ultra Tech Cement Ltd Delhi Bench has held as follows: "3. The Appellant is engaged in the business of providing different services to M/s. Ultratech Cement Ltd. (for short 'Ultratech') and to other service recipients. The activities of the Appellant carried out during the relevant period are divided into the following categories: (a) Clearing & forwarding agent services (for short 'C&F services') to Ultratech [the Appellant has paid Service Tax on such transactions during the relevant period and reflected the same in ST-3 returns]; and (b) Transportation of goods by road( (i) with issuance of consignment notes for Ultratech, on which Service Tax is paid by Ultratech under reverse charge mechanism under transportation of goods by road service (for short 'GTA service'), and (ii) without issuance of consignment notes from other GTAs, o....
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....sportation activity of cement bags from one place to another. The scope of work as provided in the para-2 of the agreement (RUD-2), provides that the appellant shall place trucks for transportation of consignment of the company from railway platform/shed/godown to the various destinations including those of dealers/stockist/individual customers as per the company's instructions on regular basis. The transport work shall be mainly carried out to different places in Rajasthan from Mata ka Than godown under Jodhpur depot. The list of specified destinations is as per the approved freight list forming part of the agreement. The other conditions are similar to the earlier agreement referred to hereinabove. Thus, we find that under this agreement under the scope of work, the appellant have correctly treated the work as GTA service and service tax have been rightly discharged by the recipient- Ultratech Cement Ltd under Reverse Charge Mechanism. Thus, the confirmation of demand on the appellant is bad and accordingly set aside. 21. Now we deal with the issue, where the appellant is not the GTA. The appellant have facilitated the transportation, the services have been provided by othe....
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....ve decision which is squarely on the same set of facts have been set aside both on the merits and also limitation. 4.6 Relying on various past precedents Ahmedabad Bench has in case of Kalpataru Power Transmission Ltd. [2021 (48) G.S.T.L. 354 (Tri. - Ahmd.)] observed as follows: "6.7 This is not a case where the service provider i.e. appellant and the service recipient i.e. EDAs have colluded and with intention to evade service tax entered into two contract one for supply of goods and other for providing service of erection, installation and commissioning of transmission line. In the bid document itself which was offered by the service recipient put a clear condition that two separate contracts need to be entered into i.e. one for supply of service and other for supply/sale of goods therefore, both the contracts are separate contract and cannot be clubbed together. 6.8 As per the definition of the Works Contract Service one of the condition is that the property in goods used in execution of works contract must be transferred during the execution of contract. In the present case the appellant while clearing the transmission towers from their factory issued the sale invoices acc....
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....r, the contract is an agreement between two parties and which is recognized as a legal document therefore, when two separate contract are entered into between two separate parties, revenue cannot insist that there should be one composite contract. Therefore, we are of the clear view that even though there is single bid/tender, the two separate contracts are legal and correct and no question can be raised. In the following judgments the issue in question was considered : * State of Madras v. Gannon Dunkerley & Co. (Madras) Ltd. - (1958) 9 STC 353 = 2015 (330) E.L.T. 11 (S.C.) * Hindustan Aeronautics Ltd. v. State of Karnataka, (1984) 1 SCC 706 * Builders' Assn. of India v. Union of India, (1989) 2 SCC 645 * State of Karnataka v. Trans Global Power Limited - (2015) 77 VST 509 * Reliance Infrastructure Ltd. v. Deputy Commissioner - 2015 VIL 60 CAL * Ishikawajma-Harima Heavy Industries Ltd. v. Director of Income-tax, (2007) 3 SCC 481 = 2007 (6) S.T.R. 3 (S.C.). 6.11 In the above judgments one common issue has been considered that there can be two separate contracts, that is one for sale and another for Works Contract Service as in the present case the value of goods sold,....