Top Stories No Service Tax leviable by Clubbing all Activities undertaken under “Cargo Handling Service”: CESTAT [Read Order] No Service Tax leviable by Clubbing all Activities undertaken under “Cargo Handling Service”, rules CESTAT By Kalyani B. Nair – On May 20, 2024 1:54 pm – 2 mins read The Allahabad Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) held that there is no service tax leviable by clubbing all activities undertaken under “Cargo Handling Service”. Show cause notice dated 16.07.2018 was issued alleging that the Appellant had not discharged Service Tax on the incomes shown under the head ‘Freight Reimbursed’ and

‘Miscellaneous Expenses Reimbursed’ in their Balance Sheet as well as in their ledger with respect to ‘Freight Claim’ & ‘Miscellaneous Claim’ during the financial year 2012-13(From October 2012) to 2016-17. It is the case of the Appellant that in respect of the transport services as per the transport agreement, the same was segregated in two parts. First part was actual transport cost on which UTCL paid service tax under ‘reverse charge mechanism’2 and the other part is ‘service charges’ for providing transportation services i.e. margin over and above transportation cost ,on which Appellant is paying the service tax. The Chartered Accountant for the appellant submitted that as per trade notice No. 87-97/ST dated 14/07/1997 issued by Madurai, Commissionerate, Transportation Service was liable to service tax under reverse charge at the hand of the consigner or consignee, even when these services were procured by C & F agent.

Accordingly, no fresh liability of service tax can be imposed on the Appellant as UTCL as already discharged applicable service tax under reverse charge in accordance with the provisions of Finance Act and Rules. It was also submitted that the C & F Agent and Transportation Services are two independent services and were rendered under two separate contracts, and therefore, the consideration for both the services cannot be clubbed together to levy Service Tax under the single service category of C & F Agency service. This will be contrary to the principle of classification of services as provided under Section 66 F of the Finance Act, 1994. A Two-Member Bench comprising PK Choudhary, Judicial Member and Sanjiv Srivastava, Technical Member observed that “The two agreements have been perused by us very critically and we find that there is no interlinkage between the two, the first agreement was exclusively for C & F agent service while the second agreement was for the transportation of goods.” The Tribunal relied on the judgment in CIT v. Motors and General Stores (P) Ltd, wherein it was held that “From the above judgment it is clear that even if it is contented that due to two separate contracts there is a shortfall in payment of tax that itself cannot be a reason to reject the concept of two separate contract legally entered into between two parties. Therefore the revenue’s contention related to this is also not sustainable.”