The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that handling of export cargo is not taxable under the cargo handling service and set aside the demand of service Tax.
Based on the intelligence report, it was alleged that Kalpataru Power Transmission Ltd,the appellant received various services from abroad but had not been paying service tax appropriately on the value of services received from the service providers who do not havea fixed establishment in India under the provisions of Section 66A of the Finance Act, 1994.
As a result of the investigation, it was found that the Appellant had not paid /short paid service tax amounting to Rs. 10,01,69,147/- under different services and the appellants were issued notice dated 17.04.2013 demanding service tax which was confirmed by the Adjudicating Authority vide impugned demanding service tax amounting to Rs. 10,01,69,146/- along with interest.
A penalty at the rate of Rs. 200/- per day or 2% per month was imposed, whichever was higher under Section 76 and also imposed a penalty equal to the tax demanded under Section 78 of the Act. In addition, he also imposed a penalty of Rs. 10,000/- in terms of the provisions of Section 77(2) of the Finance Act,1944.
Shri Prakash Shah and Shri S.J Vyas, Counsel appeared on behalf of the appellant stated that the handling of export cargo is not taxable under the Cargo Handling Service.
It was evident that for anything to be defined as a cargo handling service, it should be a bundle of activities such as that of loading, unloading, packing or unpacking of the cargo along with providing freight with or without the containers. Even mere transportation of goods is also specifically excluded.
A Coram of Ramesh Nair, member (judicial) and Raju, member (technical) observed that such a service tax could not have been levied on the cargo handling services availed by the Appellants for export purposes and the Board vide Circular No. 11/1/2002-TRU, dated 1- 8-2002 as regards the cargo handling service had also clarified that all goods meant for export are excluded from the scope of this levy.
For the cases where goods may be transhipped at a place other than the place of packing before reaching the place from where it was exported, It was clarified that service provided about any cargo which was meant for export, would not be taxable irrespective of the fact that it reaches the place of export after transhipment.
The Tribunal set aside the impugned order on the issue of the demand for service tax on Cargo Handling Services.
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