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 .
By: Dr. Sanjiv Agarwal - April 22, 2009
Discussions to this article
Gone thru the article on Service Tax on Export Cargo handling is "exempted or not to be charged".
We have been paying Service Tax to:
(a) CONCOR...for their Warehouse Charges, Container Transportation Charges from ICD (Ludhiana) to PORT (Mumbai, etc.)
(b) Shipping/Forwarding Agents..who custom clear the documents and goods at ICD or Port.
(c) Freight Forwarding Agents.. who is arranging the container release from Shipping companies and charging Terminal Handling Charges, Issue of Bills of Lading (Documentation charges)
(d) Shipping Companies who raise the Bill for Ocean Freight, THC, Doc charges, etc.
(1) if we can CLAIM REFUND of the Service Taxes already PAID to these agencies, as all these agencies are handling export cargo.
(2) Can these agencies be told not to charge any Service Tax in future.
We await your response, which is good for the exporting community.
As per your view export cargo is exempt from service tax( Notification No. 29/2005 dated 15.7.2005) .
I would like to refer rule 3(2) of Export Serice Rules 2005 wherin following conditions are mentioned for cargo to be export cargo-
a. Such serice is provided from India used outside India.
b. Payment of such serivce is received in convertible foreign exchange.
My question is when export cargo is specifically exempted the is there any relevance of Export Service Rules 2005 in this context any condion of receiving export proceeds in Foreign exchange only.
CA Kuldeep Kulshrestha
Kuldeep Kulshrestha &Associates
Mob. 9811017880, 9873917880
Mr Kulshrestra may ellaborate his query for approprate reply.
I will like to clarify my query. As per Notification No. 29/2005 dated 15.7.2005"In exercise of the powers conferred by sub section (1) of section 93 of the Finance Act ,1994, the Central Govt,....... - exe mpts the taxable service referred to in sub clause (zzn) of clause (105) of section 65 of the Finance Act , provided to any person,by an aircraft operator ,in relation to transport of export goods by aircraft,from the whole of the service tax leviable thereon under section 66 of the said Finance Act."
It is mentioned that any taxable service provided by aircraft operator in relation to export goods is exempt. In this case do Export Rules 2005 are not having any relevance as there is no mention of such rules in the said notification.Do you agree or otherwise.I think now it should be clarified to you.