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TMI Blog2010 (12) TMI 453X X X X Extracts X X X X X X X X Extracts X X X X ..... Order: OIO No. 57/Commr./LTU, dated 30-6-2008 2. The impugned order confirmed differential Service Tax of Rs. 37,40,231 plus interest found due from MSIL on the activities undertaken by it classified under 'Storage and Warehousing Services'. This amount was short-paid, as MSIL had classified the activities of baggage handling and export terminal charges during the period February, 2004 to September, 2005 wrongly under 'Cargo Handling Services'. Of the various activities undertaken during the material period, only ground handling and cargo handling were liable to Service Tax under Cargo Handling Service, as per the order. 2.1 Vide the impugned order, the Commissioner found that MSIL had deliberately misclassified the services under Cargo Handling Services to avail exemptions provided under Cargo Handling Services in respect of passenger baggage and export cargo. He held that longer period provided under proviso to section 73(1) of the Finance Act, 1994 (the Act) was rightly invocable in the case. He also imposed equal amount of penalty as the Service Tax demanded under section 78 of the Act, penalty of Rs. 1,000 under section 77 of the Act as well as penalty at the rate of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umption, warehousing or transhipment and of export goods pending clearance for export. The assessee is not a warehouse licensee under Chapter IX of the Customs Act. The assessee is registered with the Department as provider of taxable services classifiable under 'Cargo Handling Services' from the year 2002. MSIL handles as a custodian, three types of cargo viz., Import cargo, export cargo and unaccompanied passenger baggage. The assessee held the view that Service Tax can be levied on its activities relating to handling of import cargo under the head 'Cargo Handling service'. As regards the import cargo, pursuant to delivery by the concerned airlines, the assessee takes over the cargo after verifying with the import manifest. Pending clearance of the various consignments to the respective importers, the cargo will be in the custody of MSIL. Whereas most passengers clear the cargo brought with them, household articles and personal baggage often reach the airport unaccompanied by the passenger. Such baggage is also kept in the custody of the assessee pending clearance by the concerned passengers. The assessee collects a fixed charge of Rs. 4 per kg. for the consignments entru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for customs clearance. After customs formalities are complete, the goods are presented for inspection by customs, cross checked and delivered to importer. The assessee charges the importer for keeping the cargo safely in its custody till the same is delivered. (i) Destination Charges - The assessee provides service of ground handling to Air India and Blue Dart. It collects documents from the carrier and intimates the importer about the arrival of the cargo. While handing over the documents to them, for this service, they charge an amount describing it as destination charges or ground handling charges. The Assistant Commissioner found that this activity sets the ball rolling for actual handling of the cargo, which is also handled by the assessee itself. The Assistant Commissioner held that this was an additional trade promotion measure undertaken by the assessee and the assessee was liable to pay Service Tax on this activity. (B) Import of Passenger Baggage: (i) Handling/Storage charge - The assessee charges the passengers for storing the cargo till delivery of the same to the passenger on clearance by customs. (ii) Demurrage - Whenever the cargo remains wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed under the heading 'Demurrage'. This amount was taxable again under Storage and Warehousing Services. (iii) OT charges and Penalties - The custodian charged amounts in excess of regular charges for goods cleared for export after the prescribed office hours. This was in relation to the cargo clearance. It was not clear to the Assistant Commissioner as to the nature of the penalties imposed by the custodian, but it was clear that these penalties related to violations committed by the exporter. Since these were collected in connection with the services rendered by the custodian, he was of the view that Service Tax was payable on this amount also. He confirmed demand on these OT charges and penalties. (D) Abandoned Cargo - In cases where the importer does not turn up to clear the cargo by filing Bill of Entry, the assessee issues notice to the importer. Such consignments are auctioned and the sale proceeds allotted towards expenditure on auction, customs duties, charges towards storage and warehousing etc. The Assistant Commissioner demanded Service Tax under the head 'Storage and Warehousing Service' on the charges received. (E) Demand of Service Tax on amount col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orts were rendered less competitive in international market which was inconsistent with the legislative intent. 6.1 It is submitted that the lower authorities had wrongly relied on the Notification No. Cargo/13519/Pt.I, dated 4-6-1993. In the light of the clarification issued by CBEC vide Circular [F. No. B11/l/2002-TRU, dated 1-8-2002], unaccompanied baggage of passengers was not liable to Service Tax. As the Commissioner had allowed their appeal in part, the challenge is restricted to parts of the order adverse to it. 6.2 In appeal No. ST/523/2008, the impugned order is challenged also on the ground that the Commissioner had invoked section 73(1) of the Act without any justification. Such a demand could not be raised for a period beyond one year. The period of limitation of five years had no application, as there were no circumstances warranting application of such extended limitation. The Commissioner had grossly erred in imposing penalty under section 78, as suppression of facts coupled with intent to evade payment of tax could not be attributed to the assessee. More so, when the assessee was in appeal before the Tribunal on the same issue for an earlier period. In a N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to storage and warehousing of goods provided by MSIL. Therefore, these charges were liable to Service Tax under Storage and Warehousing services. (iv) Wharfage charges - The liability of this charge is canvassed on the same ground as found by the original authority. (v) Destination Charges - It is submitted that destination charges or ground handling charges were collected by MSIL for storage and warehousing service in relation to the clearance of goods. The service formed an integral part of service relating to clearance of goods and the charges were towards storage and warehousing. 8. During hearing, the learned counsel for the assessee, in both the appeals, raised a new legal argument on the basis that MSIL was a statutory authority. MSIL was posted as a custodian by issue of Public Notice No. 1/77, dated 10-1-1997. As per the Public Notice, MSIL was appointed as custodian of imported cargo under section 45(1) of the Customs Act. The Air Cargo Complex had already been specified as "Customs Area". It is submitted that section 45 of the Customs Act provided for the Commissioner approving a person in whose custody imported goods unloaded in a customs area ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n CCE v. Dr. Lal Path Lab (P.) Ltd. [2007] 11 STT 307, it is submitted that activities kept out of a levy by the Legislature could not be subjected to tax by the Revenue under another entry. This was to buttress the plea that export cargo and passenger baggage were excluded from cargo handling service; this meant that these activities could not be subjected to tax under any other entry. 9. We have also heard the learned DR for the Revenue. We have examined the case records and studied the rival submissions carefully. The taxable entries 'Storage and Warehousing' and 'Cargo Handling' read as under: "Storage and Warehousing :- "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." As per section 65(105)(zza) of the Act, the taxable service is that provided or to be provided 'to any person by a storage or warehouse keeper in relation to storage and warehousing of goods'. "Cargo Handling Service : "cargo handling service" means loading, unloading, packing or unpacking of cargo and includes, - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Ministry of Finance. These instructions also make it clear that the assessee receives amounts towards the service of storage and warehousing of cargo under this head. However, the services are not rendered to any person in the case of abandoned cargo. Therefore, demand under this head is not sustainable. 9.5 As regards the destination charges, we find that the assessee collects the documents representing the consignments brought by Air India and Blue Dart and hand over to the respective consignees. In cases where the assessee merely collects and hands over the documents to the respective consignees, destination charges will not form part of taxable value under storage and warehousing. 9.6 As regards the OT charges/penalties, the lower authorities have not given a finding as to the nature and purpose of these penalties but presume that these are collected for violations on the part of their clients in relation to storage and warehousing services. The Commissioner (Appeals) did not find this item to be taxable under storage and warehousing. In the absence of a finding as to how this amount is taxable towards any service rendered by the assessee, we find it d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Circular No. 89/7/2006-S.T., dated 18-12-2006 F. No. 255/1/2006-CX.4 Government of India Ministry of Finance (Department of Revenue) Central Board of Excise & Customs, New Delhi Subject : Applicability of Service tax on fee collected by Public Authorities while performing statutory functions/duties under the provisions of a law - Regarding A number of sovereign/public authorities (i.e., an agency constituted/set up by Government) perform certain functions/duties, which are statutory in nature. These functions are performed in terms of specific responsibility assigned to them under the law in force. For examples, the Regiona Reference Standards Laboratories (RRSL) undertake verification, approval and calibration of weighing and measuring instruments; the Regional Transport Officer (RTO) issues fitness certificate to the vehicles; the Directorate of Boilers inspects and issues certificate for boilers; or Explosive Department inspects and issues certificate for petroleum storage tank, LPG/CNG tank in terms of provisions of the relevant laws. Fee as prescribed is charged and the same is ultimately deposited into the Government Treasury. A doub ..... X X X X Extracts X X X X X X X X Extracts X X X X
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