Whether handling and transportation of containers be combined to be taxable under cargo handling service?

PJ/Case Law/2013-14/1997

Case:-M/s BALMER LAWRIE & CO LTD Vs CCE, RAIGAD

Citation:-2013-TIOL-1189-CESTAT-MUM

Brief facts:-The appellant M/s Balmer Lawrie & Co. Ltd. are running a Container Freight Station (CFS) at Navi Mumbai. They are registered with the department for the taxable service of ‘Storage & Warehousing' and ‘Cargo Handling Services'. In relation to handling of containers, they are charging handling charges as also transportation charges from the customers and these are shown separately in the invoices. On the handling charges, they are discharging service tax under the category of ‘Cargo Handling Services' whereas on transportation charges, they have discharged Service Tax under GTA services. The department was of the view that the entire transaction should be treated as one and on the whole amount received, the appellant should discharge Service Tax liability under Cargo Handling Services and accordingly, issued a Service Tax demand of Rs.57,52,077/- for the services rendered during 01.05.2005 to 30.07.2006. The appellant contested the demand holding that these are two separate services and the appellant has discharged the Service Tax liability on them separately and, therefore, the impugned demand is not sustainable. However, the adjudicating authority confirmed the demand along with interest thereon and also imposed equivalent amount of penalty under Section 78 of the Finance Act, 1994. Aggrieved of the same, the appellant is before the Tribunal.

Appellant’s contention:-The learned Counsel for the appellant submits that there are two transactions involved; one is with respect to handling of containers undertaken by the appellant, on which Service Tax liability has been discharged under the category of ‘Cargo Handling Service'. The other relates to movement of the container from CFS to the Port and vice-versa for which they have engaged a transporter. The said service of movement of container is covered under GTA services and as a recipient of the service, they have discharged Service Tax liability on the freight paid by them. Since the transactions involved are distinct and different and Service Tax liability has been discharged in accordance with law, the question of treating both transactions as one is not sustainable and accordingly, it is prayed that the appeal be allowed. The learned Counsel also relies on the decision of the Tribunal in the appellant's own case vide Order no. A/1191/13/CSTB/C-I dated 28.05.2013, where in similar circumstances, it was held that if the cargo handling charges and transportation charges are shown separately in the bills raised, the appellant is liable to discharge Service Tax liability only on cargo handling service and on the transportation charges, which were recovered separately from the customers, no liability would accrue as the said services were not taxable during that period. In the present case, Service Tax liability has been discharged on both the services.

Reasoning of Judgement:- The CBEC vide Circular no. B-11/1/2002-TRU dated 1.8.2002, inter alia , clarified that in case where the Cargo Handling Service and transportation services are rendered, and if in the bills raised for the services rendered, transportation is shown separately (on actual basis, verifiable by documentary evidence), the tax would be leviable only on the Cargo Handling Charges. This clarification issued by the Board applies even to the facts of the present appeal. Since the appellant has discharged the Service Tax liability on both these services, the question of leviability of Service Tax on whole amount under one taxable service of Cargo Handling is not sustainable in law.

Decision:-Appeal was allowed

Comment:- The crux of this case is that when the bills for handling of containers and that of transportation of the containers is being separately raised and service tax liability has been discharged on them respectively under the corresponding heads, the total amount cannot be clubbed under the service of “cargo handling service” and leviable to service tax under the same.

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PJ/Case Law/2013-14/1997

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