TMI Blog2010 (9) TMI 592X X X X Extracts X X X X X X X X Extracts X X X X ..... he reason that ‘cargo handling service’ does not apply to passenger baggage Regarding penalty - assessee did not file ST-3 returns declaring the correct taxable value as prescribed - Held that the assessee was not liable to pay service tax on demurrage and handling charges with respect to export cargo baggage in appellants’ own case - The circumstances clearly show that the appellant had not attempted to evade service tax due - the penal liability of the appellant under Section 76 of the Act to be adjudicated afresh considering the provisions of Section 80 of the Act - The appeal is rejected - ST/156 & 256/2009 - 1190-1191/2010 - Dated:- 8-9-2010 - S/Shri M.V. Ravindran, P. Karthikeyan, JJ REPRESENTED BY : Shri Joseph Kodianthara, Advocate, for the Appellant. Smt. Sudha Koka, SDR, for the Respondent. [Order per : P. Karthikeyan, Member (T)]. - This are appeals filed by M/s. Kerala State Industries Enterprises Ltd., (KSIE for short). M/s. KSIE are appointed custodians of import and export cargo at the air-cargo complex Trivandrum. Appellant is a State Govt. Undertaking and are registered with the department as a provider of taxable services falling under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. 4. We observe that the demand relates to terminal charges collected from the members of the trade undertaking export of cargo who entrust the consignments to the care of KSIE appointed as custodian at the Air Cargo Complex, Trivandrum. The exporters pay the appellants charges for services such as stacking, unloading and facilitation for X-raying of the export cargo. The relevant entry of Section 65(102) of the Act reads as follows :- Storage and warehousing includes storage and warehousing services for goods including liquids and gasses but does not include any service provided for storage of agricultural products or any service provided for cold storage from any of the entry. We find that the tax applies to storage and warehousing of all goods except agricultural products and goods kept in cold storage. The CBEC Circular cited applies to cargo handling service . We find that the impugned order has directed the original authority to allow relief in respect of tax demanded on charges collected for storage of agricultural products. As per the assessee, this accounted for Rs. 1.10 crores of a total demand of Rs. 1.35 crores wrongly adopted as Rs. 1.99 crores. We observe th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services. He also rejected the assessee s claim relying on C.B.E. C. Circular 89/7/06-S.T., dated 8-12-2006 which had clarified that the fee collected by sovereign/public authorities under the provisions of law were in the nature of statutory obligation and were excluded from he service tax levy. The Commissioner held that the custody of cargo by private bonded warehouse licensees could not be considered as a statutory function. The charges collected by KSIE as custodian of the warehouse was exigible to service tax. Yet another liability confirmed against KSIE is towards terminal charges, comprising stacking, unloading, repacking and facilitation for x-raying of export cargo, storage and warehousing. He held that terminal charges are liable to service tax. 7. The impugned order also confirmed demand of 20 paise per Kg collected by KSIE from various airlines which used the airport and had installed x-ray machines, in the premises owned by the appellants. These charges were additional consideration received from the client airlines for renting out these premises. The Commissioner held that facilitation charges @ 20 paise per Kg for X-raying cargo and baggage, collected from vario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies were covered by cargo handling service. In that context, it was clarified that passenger baggage did not come under the levy. It cannot be held that clarification was to the effect that any other service involving passenger baggage was also excluded from levy under the Act. Yet another argument advanced is that the passenger baggage does not remain in their custody for long. The duration of storage may be a few hours or a day or a couple of days. We find that the entry storage and warehousing reads as follows :- storage and warehousing includes storage and warehousing services for goods including liquids and gases but does not include any service provided for storage of agricultural produce or any service provided by a cold storage From the language of the taxable entry, we find that the tax applies to storage and warehousing of all goods except agricultural produce and goods kept in cold storage. Obviously, passenger baggage is not excluded from the tax. The duration of storage or warehousing is not material to determine the liability to tax under this heading. 9.1 The main plank of the challenge to the demand is that since the passenger baggage was specifically e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng. 10.1 As regards the charges collected @ 20 paise per kg for facilitating X-raying of cargo by customer airlines at the premises of the appellants, we find that the activity would be taxable under renting of immovable property. KSIE pays service tax on renting of space. These charges @ 20 paise per Kg is collected only for providing air-conditioned space where the customer airlines install and operate their x-ray machines. Therefore, the demand in respect of this activity is in order as short payment of tax on renting of immovable property. We uphold this demand confirmed against KSIE. 10.2 As regards penalty imposed under Section 76 of the Act, we find that this section reads as under : Section 76. Penalty for failure to pay service tax. Any person, liable to pay service tax in accordance with the provisions of section 68 or the rules made under this Chapter, who fails to pay such tax, shall pay, in addition to such tax and the interest on that tax in accordance with the provisions of section 75, a penalty which shall not be less than two hundred rupees for every day during which such failure continues or at the rate of two per cent. of such tax, per month, whichever ..... X X X X Extracts X X X X X X X X Extracts X X X X
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