Whether Courier service provided by Co-loader on charges collected from other authorized persons falls under BAS?

PJ/Case Laws/2012-13/1100

Case:M/s DTDC COURIER AND CARGO LTD. V/S CCE, ST, BANGLORE

Citation:2012-TIOL-280-CESTAT-BANG

Issue:- Courier service - Service tax on co-loader on charges collected from other authorized persons in their capacity as co-loaders – prima facie, case not made out as service fell under BAS – predeposit of Rs. 25 Lakhs ordered.

Brief Facts:- Applicant is providing ‘Courier service'. They have also authorized several other parties to act as courier service providers under the banner of ‘DTDC Courier Service'. The customers handed over the parcels, packets, letters etc. to the said parties for effecting delivery to the addressees. The applicant has acted as ‘Co-loader' by collecting the parcels/ packets/ letters from the said parties and arranging to deliver at different destinations. While the applicant has paid service tax in respect of courier services rendered by them, they have not paid service tax on charges collected from other authorized persons in their capacity as 'Co-loaders'.

The Commissioner has held that the said activities fall under the category of 'Business Auxiliary Service' (BAS) and confirmed demand of service tax amounting to Rs.60,36,388/- along with interest and imposed equal amount of penalty.

Appellant is in appeal before the Tribunal against the said decision.

Appellant’s Contention: - Appellant submits that the activities of a 'Co-loader' cannot be considered as falling under the category of BAS and, at the most, the same could be considered as falling under the category of 'Business Support Service'(BSS) which became taxable w.e.f. 1/5/2006 and that they have discharged service tax under the category of BSS for the period from 1/5/2006. Relying on the instruction of the Board contained in Circular F.No.341/43/96-TRU dt. 31/10/1996, they submit that the activities of 'Co-loader' are not subject to service tax. It was also submitted that the demand of service tax having been raised by Notice dt. 20/10/2009 relating to the period 10/9/2004 to 30/6/2006 is clearly time barred. Further, it is submitted that the demand for period May, 2006 and June, 2006 amounting to Rs. 7,12,787/ - is clearly unsustainable inasmuch as for the said period they have already paid service tax under the category of BSS.

Respondent contention: - Revenue submitted that the instructions issued in 1996 treating the activities of 'Co-loader' as not taxable does not justify non-payment of service tax under BAS w.e.f. 10/9/2004.

Reasoning of Judgment:- The Tribunal noted that activities of the applicant as 'Co-loader', prima-facie, is falling under the category of BAS inasmuch as the applicant has rendered such services to other parties who provided courier services. Merely because the parties to whom they provided services were operating under the banner of DTDC in terms of franchise agreements, the said parties, prima-facie, cannot be treated other than as clients. Therefore, prima-facie, the applicant is rendering the services of BAS after amendment of the definition of BAS w.e.f. 10/9/2004 and the applicant has failed to disclose the relevant details to the Department and therefore, extended period of limitation is also invocable for the purpose of demanding the service tax. However, the submission of appellant that they have paid service tax under the category of BSS for the period May, 2006 and June, 2006 deserves to be taken note of.

Pre-deposit of Rs. 25 Lakhs within 8 weeks is ordered. On depositing of this amount, rest of the pre-deposit will be waived.

Decision:- Stay application disposed off accordingly.

Comment:- Although this is stay application and not a final decision. But the ratio decindandia of the above decision is that the service tax is to be paid by co-loader of couriers also. It will fall under BAS.

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PJ/Case Laws/2012-13/1100

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