TMI Blog2022 (2) TMI 667X X X X Extracts X X X X X X X X Extracts X X X X ..... On plain reading of definition of Cargo Handling Service, it is clear that to classify the service under Cargo Handling Service there must be provision of services of loading, unloading and it includes handling of cargo for freight in special containers or for non containerized freight, for all mode of transport. It means service of loading, unloading and handling of cargo whether in container or otherwise may merit classification under the said category irrespective of fact of mode of transportation but by any means transportation of goods in container whether by road and/or sea cannot be classified under the Cargo Handling Service. It is a fact on record that respondent had provided services of transportation of goods by road in a container in the capacity of Goods Transport Agency and arrange services of handling of cargo at load port and dispatch port as well as sea transportation on reimbursement of amount on actual basis from recipient of services. From Board clarification No.B.11/1/2002-TRU dated 01.08.2002, it is clear that services under the category of Cargo Handling Services are those services provided by the Cargo Handling Agencies who undertake the packing, unpa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing nor transportation of goods by sea, etc. As per the undisputed fact, the service of handling containers at load ports, transportation of containers by vessel from one port of India to another port of India and handling of containers at discharge ports was done by shipping line only. The payment of sea freight handling charges as discussed in paras (Supra) on behalf of the clients to the shipping line and reimbursement on actual basis is not under dispute - For the purpose of levy of service tax there must be a provision of service for consideration, once there is no provision of service and receipt of consideration there cannot be any levy of service tax for making a payment on behalf of the client and raising invoices. Respondent has simply arranged payment on behalf of service recipient i.e. Consignor or consignee to the shipping line and taken reimbursement on actual basis from the receiver of service hence, the same cannot be considered as provision of service on consideration basis. Time Limitation - HELD THAT:- There is also the issue that whether the transportation of goods involved in respect of agricultural produce and whether the same is exempted, levy of Serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The adjudicating authority dropped the demands vide OIO No. BVR-EXCUS-000-COMM-10-2019-20 dated 31.05.2019 on the ground that at no point of time during the transportation of the goods respondent was in any way involved in undertaking the loading, unloading, packing of cargo. The Circular No. 334/1/2008-TRU dated 29.02.2008 clearly mentioned that mere transportation is not the essential character of cargo handling service. In the present case Respondent is only providing transportation of goods by road and Shipping line is transporting the goods by sea, all the remaining service, they procured from the actual service provider i.e Shipping line etc., made payment to such third party on behalf of customers and claim reimbursement of exactly the same amount paid on their behalf to the shipping lines, therefore the present case does not fall under the category of Cargo Handling Service. He also waived the penalty related to the Directors. 02. The Revenue challenged the impugned Order-In-Original in the present appeals on the grounds that while interpreting the definition of Cargo Handling Service, adjudicating authority has erred by not giving cognizance to the meaning of the word ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r customers as there was not contractual agreement between the assessee and their service recipients. The Revenue also relyupon the Judgments of UNION OF INDIA ORS VS. COASTAL CONTAINER TRANSPORTERS ASSOCIATION ORS. 2019(22) GSTL 481(SC). Section 66F (3) of the Finance Act 1994 provide the scope for determination of taxability of a bundled Services. From this, it can be inferred that if during the course of providing a service i.e transportation of goods from consignor to Consignee, assessee procure the service on behalf of their customers to transport the goods by sea and thereafter again take the charge of the same container at discharge port and hand it over to the consignor or consignee or in certain cases of the same container at discharge port and hand it over to the consignor or consignee or in certain cases makes further arrangement of transport of goods by road till the place of consignee, the assessee as a service provider combine elements of different service while providing main service. Adjudicating authority has also erred in holding that the charges levelled against the Directors are also not proved as nowhere in the impugned OIO, adjudicating authority has made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods, with or without one or more of other services likes loading, unloading, unpacking. Respondent had not provided any service of handling of cargo but had provided service of Transportation of containerized Cargo only. In other words they provided service of transportation of goods without handling of cargo. Appellant has tried to read the inclusive portion of definition particularly clause 23(a) by tried to read certain word used therein isolation viz includes . freight in special containers , for all modes of transport and incidental freight . Clause 23(a) has to be read in whole and it starts from the wording cargo handling services before the said words, it means all such activity can be classified under cargo handling services when there is actual handling of cargo coupled with such situations like in special container, for all modes of transportation and incidental to freight. The Appellant fails to apply the provisions of Section 65A Classification of taxable services. It is presumed that services provided by the respondent were composite services consisting of combination of different service which cannot be classified as per clause (a) of 65A(2), then also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etc but also raised invoice for road transport freight, LR number etc with almost all similar information as provided under Rule 4A and 4B of Service tax Rules, 1994. He also submits that merely by not mentioning one or other information required under the said Rules in the consignment note Lorry receipts, it amount to technical procedural lapse if any on its parts but when consignment note by whatever name called were issued, by any means it cannot be said that services provided by it was not GTA. 5.1 Respondent further submits that in most of the cases contract was oral and as per the provisions of Section 10 of the Indian Contract Act, 1872, contract can be written as well as oral also. In the present case consignment note, invoice raised on the clients and payment received from the client based on such documents, it clearly proves that there was contractually agreement between respondent and clients and for the very reason clients had reimbursed the amount paid on behalf of them. The Respondent relyupon the decisions of Pharmalinks Agency (I) Pvt. Ltd. Vs. CCE Pune-III 2015 (37) STR 305(Tri. Mumbai), Commissioner of S.T. Chennai Vs Sangamitra Service agency 2014 (33 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 73 of the Finance Act, 1994 can be invoked just merely respondent fail to pay tax and/or issue involved is interpretation of statute? 6.1 We find that the adjudicating authority dropped the proceeding of the Show Cause Notice after considering the legal position and facts such as contracts between the respondent and the service recipient. The learned adjudicating authority dropped the proceeding also on the ground that as regard service other than transportation, the respondent is a pure agent to incur expenditure of cost in the course of providing taxable service on behalf of the customer as the recipient of service separately indicated in the invoice issued by it as the service provided to the customer as service recipient. With this finding, the learned Commissioner held that other than GTA all other services are on reimbursable basis and the same shall not be included in the gross value of GTA services and shall not construe the Cargo Handling Service . Since the revenue has challenged the impugned order, we need to re-examine the whole issue. We find that the basic issue is whether this service of the respondent falls under Cargo Handling Service or otherwise, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... handling of export cargo or passenger baggage or mere transportation of cargo. The taxable service, as per sub-clause (zr) of clause (90), is any service provided, to any person, by a cargo handling agency in relation to cargo handling services. 3. The services which are liable to tax under this category are the services provided by cargo handling agencies who undertake the activity of packing, unpacking, loading and unloading of goods meant to be transported by any means of transportation namely truck, rail, ship or aircraft. Well known examples of cargo handling service are services provided in relation to cargo handling by the Container Corporation of India, Airport Authority of India, Inland Container Depot, Container Freight Stations. This is only an illustrative list. There are several other firms that are engaged in the business of cargo handling services. From the above clarification, it is clear that services under the category of Cargo Handling Services are those services provided by the Cargo Handling Agencies who undertake the packing, unpacking, loading and unloading of the goods meant to be transported by any means of transportation. In the instant case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that services provided by the respondent are composite services consisting of combination of different service which cannot be classified as per clause (a) of Section 65A(2) then also essential character of service was transportation of goods and not as handling of cargo. It is not the case of the department that services provided by respondent cannot be classified at specific services as provided under Section 65A(2)(a) therefore, different service provided by the respondent cannot be classified as Cargo Handling Service . 6.4 The respondent also referred to CBEC Circular No. 104/7/2008-S.T. dated 06.08.2008, the relevant paras are reproduced below: 3. Issue : GTA provides service to a person in relation to transportation of goods by road in a goods carriage. The service provided is a single composite service which may include various intermediary and ancillary services such as loading/unloading, packing/unpacking, transshipment, temporary warehousing. For the service provided, GTA issues a consignment note and the invoice issued by the GTA for providing the said service includes the value of intermediary and ancillary services. In such a case, whether the intermediary o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on: Cargo handling service (Section 65(105)(zr)] means loading, unloading, packing or unpacking of cargo and includes the service of packing together with transportation of cargo with or without loading, unloading and unpacking, Transportation is not the essential character of cargo handling service but only incidental to the cargo handling service. Where service is provided by a person who is registered as GTA service provider and issues consignment note for transportation of goods by road in a goods carriage and the amount charged for the service provided is inclusive of packing, then the service shall be treated as GTA service and not cargo handling service. They also relied upon Circular No.51/13/2002 dated 7.01.2003 which clarifies as under:- 2. The matter has been examined in the Board. It is hereby clarified that any service (transaction) can be taxed only once, even if it appears to fall under two or more categories. Therefore, before levying service tax it is essential to determine under which category a particular service falls. It should be kept in mind that service tax is a tax on the service provided and is recovered from the service provider (in some cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which reads as under:- 4. A point has been raised as to what would be the value of service tax in a case where transport and cargo handling service is provided in a composite manner. The measure of tax is the gross amount charged by the cargo handling agency from the customer Therefore, if lumpsum amount is charged for both transportation and cargo handling, the tax will be payable on the entire amount. On the other hand, if the bill indicates the amount charged for cargo handling and transportation separately on actuals basis (verifiable by documentary evidence), then the tax would be leviable only on the cargo handling charges. 5. Cargo handling services are provided in the port also. Whether such service will be covered in the category of port services or cargo handling service. In this context it may be mentioned that port services cover any service provided in relation to goods or vessels by a port or a person authorized by the port. This includes the cargo handling service provided within the port premises. Therefore to this extent there may be an overlap in cargo handling service and the port service. However since port services covers all the service in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egative list. The negative list is given under Section 66D of the Finance Act, 1994. The base of interpretation of specified description of service or bundled service were incorporated under Section 66F of the Finance Act, 1994 with effect from 01.07.2012 ibid whereas, service is capable of differential treatment for any purpose based on its description, the most specific description shall be preferred over a more general description therefore, the service provided by the respondent i.e. Goods Transport Agency and/or service in relation to transport of coastal goods were more specific service and service tax was rightly paid under said category even after 01.07.2012 and category of Cargo Handling Service was general one therefore, the services provided by the respondent were rightly merit classified under GTA and cannot be classified under Cargo Handling Service . In this regard the respondent invited our attention to CBIC Circular No.165/16/2012-ST dated 20.11.2012 wherein, it was clarified that- Negative List based comprehensive approach to taxation of services came into effect from the first day of July, 2012. Accounting code for the purpose of payment of service tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification of activities, etc. Even from 01.07.2012 as per Section 66F(3) subject to provisions of Sub-section (2),the taxability of bundled service shall be determined in the following manner namely,- (a) if various elements of such service are naturally bundled in the ordinary course of business, it shall be treated as provision of the single service which gives such bundle its essential character; (b) if various elements of such service are not naturally bundled in the ordinary course of business, it shall be treated as provision of the single service which results in highest liability of service tax. 6.8 We find that though in the show cause notice, it is not provided that the services were naturally bundled but in the revenue s appeal it was considered the service as bundled service. Though services of transport of goods by road by GTA and services of loading and unloading/handling of cargo at Load port and discharge port as well as sea transportation by any means cannot be considered naturally bundled in the ordinary course of business. However, even if it is assumed that services provided by it were naturally bundled in the course of ordinary business then also essen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is no change in the definition of Goods Transport Service as well as levy and payment of service tax on service of GTA prior to 01.07.2012 and with effect from 01.07.2012 which is also discussed in the show cause notice. Prior to 01.07.2012 Goods Transport Agency was defined at Section 65(50b) of the Finance Act, 1994 as under Goods transport agency means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called. As per Section 65(105)(zzp) of the Finance Act, 1994 taxable service defined as under taxable service means any service provided or to be provided to any person, by a goods transport agency, in relation to transport of goods by road in a goods carriage. With effect from 01.07.2012 Goods Transport Agency was defined at Section 65B(26) of the Finance Act, 1994 as under Goods transport agency means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called. In both the period, the condition of issue of consignment note is existing. Rule 4A and 4B of Service Tax Rules, 1994 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, person liable for paying service tax whether consignor, consignee or the goods transport agency. In the present case, respondent had not only raised consignment note, truck loading slip/Lorry Receipt bearing serial number, date, consignor s name, consignee s name, from to, back to, container number, name of transporter, truck number, weight, etc but also raised invoice for road transport freight, LR Number, etc with almost of similar information as provided under Rule 4(A) and 4(B) of Service Tax Rules, 1994. 6.12 We find that the revenue in its appeal alleged that since the LR Number was not mentioned, the respondent has not fulfilled the condition of Rule 4(A) and 4B of Service Tax Rules, 1994 therefore, the service provided by the respondent cannot fall under GTA. We find that as per undisputed facts discussed above, all the information required for consignment note as per the said rules were mentioned in the invoices and consignment note cum Lorry Receipt thus, it is clear that the allegation of non-issuance of consignment note hence it is not GTA is totally baseless and without verifying the documents namely consignment note/Truck Loading Slips and road transport ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sement and also paid service tax wherever payable by them as GTA on the road transportation while providing services of transportation of goods by road. The respondent had also acted as pure agent of their service receiver for procuring service of sea transportation and handling of cargo at both the ports, etc, they had received invoices from the shipping lines for transportation of container from one port of India to another port of India and/or Cargo Handling for client which includes container number, sea freight charges, service tax, etc. based on the said invoice they had also mentioned such details in invoice raised by them on receiver. The bill of coastal for corresponding container/vessel through which the container was to be transported was showing name of consignor and consignee therefore, whatever amount shown in the invoice is nothing but component of total paid on behalf of the receiver of service to be recovered from receiver of service only. 6.15 Based on the above factual position, we need to analyze the provision of Section 67 of the Finance Act, 1994. As per Sub-section (1) of Section 67 where, service tax is charged on services with reference to its value, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on his own account. Explanation 1.- For the purposes of sub-rule (2), pure agent means a person who- (a) enters into a contractual agreement with the recipient of service to act as his pure agent to incur expenditure or costs in the course of providing taxable service; (b) neither intends to hold nor holds any title to the services so procured or provided as pure agent of the recipient of service; (c) does not use such goods or services so procured ;and (d) receives only the actual amount incurred to procure such services, Explanation 2.- For the removal 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. In the present case, it is not a matter of dispute that the Service Tax was paid on the consideration received for the provision of Goods Transport Agency Service (GTA) without seeking exclusion of any amount (wherever payable by them as GTA) and not paid Service Tax of the amount received towards Sea Transport and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cases the contracts were oral and as per provision of Section 10 of the Indian Contract Act, 1872 the contract can be written as well as oral also. In the instant case consignment note/invoice raised on the clients and payments received from the client. Based on such documents it clearly proves that there was contractual agreement between the respondent and their clients and for this very reason clients had reimbursed the amount paid on behalf of the service recipient. We agree with these submissions of the respondent that all these actions are considered existence of contractual agreement within the meaning of the Indian Contract Act, 1872. The quotation of the composite amount was sent in certain cases just because of client/ receiver of service was aware about the arrangement of service of sea transportation and handling of cargo of load port and discharge port in the capacity of pure agent and reimbursement on actual basis. 6.16 In various judgments this issue has been decided that amount reimbursed in the capacity of pure agent no service tax can be demanded. Some of those judgments are referred below:- PHARMALINKS AGENCY (I) PVT LTD 2015 (STR) 305 (TRI-.MUMBAI) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se Agent to the client. It is informed that the practice obtaining is to show the charges for services as agency commission , charges, agency and attendance charges, agency charges and some similar descriptions. The service tax will be computed only with reference to such charges. In other words, payments made by CHA on behalf of the client, such as statutory levies (cess, customs duties, port dues, etc.) and various other reimbursable expenses incurred are not to be included for computing the service tax. 2.5 In many cases, the Customs House Agent undertakes turnkey imports and exports where a lumpsum amount is charged from the client for undertaking various service. In these cases, the lumpsum amount covers not only the agency commission fee but also other expenses and no separate break-up is given in respect of these expenses. It has been decided that in such cases, the value of the taxable service shall be 15% of the lumpsum amount charged TO THE CLIENT. The Customs House Agents are require to show the service charges at 15% of such lumpsum amount of the bills and service tax of 5% will be chargeable on the above 15%. 9 . In view of the admission by the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e client and raising invoices. Respondent has simply arranged payment on behalf of service recipient i.e. Consignor or consignee to the shipping line and taken reimbursement on actual basis from the receiver of service hence, the same cannot be considered as provision of service on consideration basis. 6.18 As we opined in the above para that the respondent had provided service of Goods Transport Agency, the said service even continued to be defined as Goods Transport Agency Service (GTA) from 01.07.2012 also under Section 65B (26) of the Finance Act, 1994. As per Section 67 of the Finance Act, 1944 which provides that subject to provision of Chapter V of the Finance Act, 1994 where the Service Tax is charged on any service with reference to its value then such value shall:- i) In case where a provision of service is for consideration in money be the gross amount charged by service provider for such service provided or to be provided by him. ii) . iii) .. 6.19 In the instant case the respondent had provided taxable service of GTA to their service recipient i.e. Consignee or consignor as the case may be and for the purpose of levy of service tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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