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TMI Blog2018 (11) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... o rendering their services as Custom House Agency, they were rendering the services relating to handling of chemicals such as packing and palletisation of chemical storage, transportation and obtaining permission from the Port and Customs authorities for entry of cargo into deep water port by use of their clients in offshore operations of oil exploration. b. They were also rendering the services relating to handling of import and export cargo, unloading of cargo from vessel into barges and unloading of barges and loading the cargo into trucks/rail rakes and despatching to different destinations etc. 3. A show cause notice was issued alleging that the above activities would fall under the category of Cargo Handling service and were liable to service tax. Further, w.e.f. 01.07.2003, the show cause notice proposed to classify these services as 'Port Service" inasmuch as the cargo handling service is provided within the port premises. After following due process of law, lower authorities confirmed the service tax demand along with interest and imposed penalties under sections 76 & 77 of Finance Act, 1994. Aggrieved by this impugned order, the present appeal has been filed by appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A is ordinarily reimbursed by the importer / exporter for whom the above services are rendered. Apart from the above charges, the CHA also charges the client for his service under the head / nomenclature of 'agency and attendance charges' or similar kind of heads which is purported to be his service charge in respect of the services rendered in relation to the import / export goods. 5. He would thus argue that the role of Custom House Agents includes providing other necessary facilities to their parties and these cannot be considered as cargo handling services or port services (after 01.07.2003). Ld. Counsel further argued that the Commissioner has relied upon the provisions of Rule 5 of the Service Tax (Determination of Value) Rules, 2006, according to which the reimbursable expenses also need to be included in the value of taxable services rendered. Rule 5 of the Service Tax (Determination of Value) Rules, 2006 reads as follows: "5.Inclusion in or exclusion from value of certain expenditure or costs.- (1) Where any expenditure or costs are incurred by the service provider in the course of providing taxable service, all such expenditure or costs shall be treated as c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of doubts it is clarified that the value of the taxable service is the total amount of consideration consisting of all components of the taxable service and it is immaterial that the details of individual components of the total consideration is indicated separately in the invoice. Illustration 1.- X contracts with Y, a real estate agent to sell his house and thereupon Y gives an advertisement in television. Y billed X including charges for Television advertisement and paid service tax on the total consideration billed. In such a case, consideration for the service provided is what X pays to Y. Y does not act as an agent behalf of X when obtaining the television advertisement even if the cost of television advertisement is mentioned separately in the invoice issued by X. Advertising service is an input service for the estate agent in order to enable or facilitate him to perform his services as an estate agent Illustration 2.- In the course of providing a taxable service, a service provider incurs costs such as traveling expenses, postage, telephone, etc., and may indicate these items separately on the invoice issued to the recipient of service. In such a case, the service pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 003). He was licensed as Custom House Agent but these other services are liable to be taxed as per Service Tax Act. Therefore, the demands were correctly confirmed by the lower authorities and the appeal needs to be rejected. 8. We have considered the arguments on both sides and perused the records. The two short points to be decided are a) whether the services of packing, palletisation, storage, transportation, handling of import and export cargo etc. undertaken by the appellant are classifiable as 'cargo handling services' / 'Port Services' (from 01.07.2003) or whether they should be considered as a part of Custom Handling Agency services being rendered by the appellant. (b) if these are considered as part of Custom House Agency services, whether the amounts which they have collected on account of the aforesaid services should be treated as reimbursable expenses and hence not included in the assessable value or whether these amounts should be included in the assessable value for the purpose of service tax in respect of the Custom House Agency services rendered by the appellant. Consequently, whether the demands are sustainable and whether penalties are imposable under sections 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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