Whether services like handling, X-raying, unitization, carting, etc. provided by Assessee - covered under “storage and warehousing services” or “airport services”

PJ/Case Laws/2011-12/1461

Whether services like handling, X-raying, unitization, carting, etc. provided by Assessee - covered under “storage and warehousing services” or “airport services” – stay application partly allowed

Case: AIRPORT AUTHORITY OF INDIA v/s COMMISSIONER OF SERVICE TAX, DELHI

Citation: 2011 (24) S.T.R. 326 (Tri.-Del.)

Issue:- Whether services like handling, X-raying, unitization, carting, etc. provided by Assessee - covered under “storage and warehousing services” or “airport services” – stay application partly allowed.

Brief Facts:- Appellant was engaged in the business of setting up and managing various airports in the country and in this business appellant provides various services taxable under Finance Act, 1994. They are registered centrally for payment of tax for all such services except the service in respect of export and import cargo, for which the appellant is registered only in respect of Delhi Air Port. The dispute invlolved is that the appellant is contesting that the service rendered by them is in the nature of "Cargo Handling Service" as defined in Section 65(105)(zr) of Finance Act, 1994 but will not fall under the entry because such services are specifically excluded from it.

Revenue classifies this service as "Storage and Warehousing Charges" as defined under Section 65(105) (zza) till 10-9-2004 and under "Airport services" as defined under 65(105)(zzm) from 10-9-2004. Once such classifications are adopted the Appellant had to pay tax in respect of services rendered, though such service was in relation to export cargo.

Hence, the matter is before the Tribunal. Application for stay and waiver of pre-deposit is filed.

Appellant’s Contention:- Appellant contended that they are not engaged in the business of storage and warehousing because their whole business of export is organized with the primary objective of sending out export cargo at the earliest opportunity. They have to do some handling of export cargo like unloading, carting, X-ray, unitization etc. during the process of accepting cargo from the exporters, getting it examined by customs and finally entrusting the goods to the concerned airline for taking it out of the country. Such activity can in the normal course be considered as cargo handling services. But the definition at 65(105)(zr) specifically excludes handling of export cargo from the scope of the entry. Once it is excluded from the entry where the service might have fitted, Revenue cannot argue that the service will come within the definition of another entry.

Appellant points out that when Cargo Handling service was introduced in 2002, they had sought clarification from the Ministry that whether the service rendered by them will be taxable under that category and it was clarified vide Circular B11/1/2002-TRU, dated 1-8-2002 that no service tax would be payable. The appellant also rely on the decision of the Tribunal in Maersk India (P) Ltd. v. CCE, Raigad in this matter.

Appellant further argued that this is case which involves interpretation of legal provisions and hence extended period of 5 years cannot be invoked in this case for issuing demand under Section 73 of Finance Act because they had no intention to evade any duty.

Respondent’s Contention:- Revenue argued that no exemption is given for cargo handling services in relation to export goods though in appeal memorandum and during pleading such claim is made. The position is that such services are excluded from the definition of "Cargo Handling services". So if any part of the appellant's service is covered under definition for some other service as given in Finance Act, 1994, the service will become taxable. In this case the service is covered by the definition for "Storage and Warehousing Service" and hence the appellant is liable to pay tax.

Further they relied on Public Notice No. Cargo/13519/Pt. I, dated 4-6-93 issued by the appellant which mentions storage and processing charges. Further, it is argued that from 10-9-2004, the service provided by the appellant will be squarely covered by the definition of Air Port Service with or without the proviso added by Finance Act, 2010.

Reasoning of Judgment:- The Tribunal held that they are not satisfied with the argument that the appellant is engaged in the business of storage and warehousing in relation to exports. In the case of export cargo the effort is to reduce the holding time in Airport to the extent possible. If there is holding of cargo for a few hours or a few days for proper handling of cargo and loading on to proper aircraft, the activity cannot be considered as storage and warehousing service notwithstanding the fact that they charge to the clients in the name of "storage charges". But the position from 10-9-2004, when entry was notified for "Air-port Service" the position is different. Under this entry service rendered to any person, by Airports Authority or by any other person, in any airport or a civil enclave became taxable. By a simple understanding, the definition at 65(105)(zzm) would cover the services provided by the appellant even without the proviso inserted by Finance Act, 2010. For this period the main contention of the appellant is on time-bar.

Decision:- Stay Application partly granted.

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PJ/Case Laws/2011-12/1461

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