As per Section 65(23) of Finance Act, 1994 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-containerized freight, services provided by a container freight terminal or any other freight terminal, for all modes of transport and cargo handling services incidental to freight, but does not include handling of export cargo or passenger baggage or mere transportation of goods.
According to amendments made by Finance Act, 2008, cargo handling service had been redefined under section 65(23) to mean loading, unloading, packing or unpacking of cargo and shall include -
• cargo handling service provided for freight in special containers or for non-commercialized freight, service provided by a container freight terminal or any other freight terminal, for all mode of transport, and cargo handling service incidental to freight; and
• services of packing together with transportation of cargo or goods with or without one or
more of other services like loading, unloading, unpacking, but shall not include, handling of export cargo or passenger baggage of mere transportation of goods.
According to CBEC clarifications, cargo handling services are also provided by the port. Since port services covers all the service in relation to goods and vessels and therefore such services are more specific to port, the service provided in a port in relation to handling of goods would be appropriately covered under port service and no separate levy will be attracted under the category of cargo handling agency service. Similar would be the case in respect of service provided for storage of goods in the port premises.
All goods meant for export are excluded from the scope of this levy. There may be cases where goods may be trans shipped at a place other than the place of packing before reaching a place from where it is exported. For example goods are packed say at Agra for transportation to Bhopal where it is transshipped and ultimately reaches Mumbai, from where it is exported. A doubt has been raised as to whether service tax would be leviable on cargo handling service at Agra. It is clarified service provided in relation to any cargo which is meant for export, would not be taxable irrespective of the fact that it reaches the place of export after transshipment. However, the relevant documents should show that the goods are for export.
Thus, Circular issued by Central Government (TRU) dated 1.8.2002 clearly shows that all goods meant for export are excluded from the scope of levy of service tax.
In Commissioner of Central Excise v Konkan Marine Agencies [2009 -TMI - 32132 - HIGH COURT KARNATAKA]appellant paid service tax under port services and later claimed refund of service tax paid on the ground that it handled export cargo and not domestic cargo and that export cargo was exempt from payment of service under cargo handling services. While the adjudicating officer allowed the refund claim, the same was turned down on review by Commissioner holding it to be covered under port services. On appeal, Tribunal allowed the claim and the instant appeal was then filed by revenue. The high court has held that definition of cargo handling service u/s 65(23) of Finance Act 1994 puts a bar with regard to imposition of service tax meant for export which also includes handling of export cargo and as such upheld the tribunal's order.
In the instant case, it was held that a bare reading of the definition of cargo handling further makes it clear that in any case handling of export cargo would not attract service tax at all. After having gone through the aforesaid definition, it left no amount of doubt that such a service tax could not have been levied on the assessee which was handling loading of cargo meant for export purpose .
The definition of port service is not applicable in the instant case for the simple reason that definition of cargo handling service clearly puts a bar with regard to imposition of tax meant for export which also includes handling of export cargo. The appeal of revenue was dismissed in limine .