The Kolkata bench of Customs, Excise and Service Tax Appellate Tribunal held that the transportation of goods service by a subcontractor could not be taxable under “Cargo Handling Service” and allowed the appeal by Laxmi Narayan Transport (the Appellant) against the order by the Commissioner of CGST & Central Excise (CCE) (the Respondent).
The CCE initiated an investigation against the appellant on the allegation that they have failed to discharge Service tax on the services provided to M/s. Sanjay Sahani Transport Agency (P.) Ltd. (SSTAPL) and M/s. Jindal Stainless Limited (JSL) and a show cause notice was issued demanding Service tax of Rs.3,16,39,804/- along with interest and penalty for the period 2012-13 to 2016-17, by invoking an extended period of limitation, which was computed on the basis of TDS Certificates in form 26AS issued by the Income tax department.
The counsel who appeared on behalf of the appellant stated that they had provided bundled service to their clients and the impugned order had failed to appreciate the nature of bundled service provided by them in terms of the work Orders issued to them and by applying the test of essentiality under Section 66F(3)(a) of the Finance Act, 1994 the naturally bundled composite contract would be essentially for goods transportation service and not for Cargo handling service. In support of this statement, the counsel relied on the Board Circular No. 104/07/2008-S.T.
The counsel further submitted that in respect of the services provided to SSTAPL, it was evident from the clauses in each Work order and the invoices issued by us signify that the services fall under the category of Goods transportation and not Cargo handling service. However, since the consignment note had been issued on JSL and not to us, the said service qualifies as services of transportation falling under the negative list entry – Section 66D(p). Therefore, the said service duly qualifies under the negative list and lies outside the ambit of Service tax.
The counsel who appeared on behalf of the revenue reiterated the findings in the impugned order.
The two-member bench consisting of Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) after hearing both sides held that “The services provided by the appellant to M/s SSTAPL as a sub-contractor as well as M/s JSL directly, was transportation of goods service and not cargo handling service. Accordingly, we set aside the demand confirmed in the impugned order under ‘cargo handling service’ on merit as well as on limitation. Since the demand itself is not sustainable the question of demanding interest and imposing a penalty does not arise” and the appeal was allowed.
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