The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed service tax demand and ruled that handling of the container not covered under the taxable activity of cargo handling.
During the period 01.05.2003 to 16.07.2003, the appellant has not paid service tax on the value of services rendered on account of ground rent of empty containers, resulting into the non-payment of service tax of Rs.1,02,416/-. The noticees were charging for the services rendered in respect of handling of empty containers but have not paid the service tax for the same. Resultantly, the service tax of Rs.6,14,860/- was found as not paid during the period August, 2002 to December, 2003.
The counsel for the appellant submitted that the empty container is moved to the CONCOR warehouse for storage. In this case charges are collected for godown rent of the warehouse from the respective shipping line and no separate charges are collected for movement of empty containers. Service tax has been discharged on the godown rent based on cum tax value.
It was submitted that the department has erroneously relied upon Circular No. 60/9/2003 dated 10.07.2023 to assume that impugned activity of handling of empty containers outside the storage area was covered under storage and warehousing of the containers.
The Departmental Representative has mentioned that the issue involved in the present appeal is about non-payment of service tax and handling of empty containers. The Circular No. B11/1/2002-TRU dated 01.08.2002 clarifies that all the activities of making arrangement for space to keep the goods, loading, unloading and stacking of the goods in the storage area, keeping inventory of goods, making security arrangements, providing insurance cover etc., all are covered under the taxable activity of storage and warehousing. Hence, the activity of handling the empty container is rightly held to be covered under the said activity.
A Two-Member Bench comprising Dr Rachna Gupta, Judicial Member and Hemambika R Priya, Technical Member observed that “The activity of handling of container cannot to be covered under the taxable activity of cargo handling as cargo handling service also. This activity is essentially a service in relation to merchandise. As per the dictionary also cargo means goods carried on a ship, aircraft or motor vehicle. The empty containers are not the merchandise. The Circular No. B11/1/2002-TRU has explained that empty containers cannot be treated as cargo. In light of these observations, the activity in question cannot even be called as the taxable activity of Cargo Handling Service.”
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