Unloading goods incidental to Transportation comes under ‘Cargo Handling Service’: CESTAT upholds Service Tax demand [Read Order]

The Chennai bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) upheld the Service tax demand and observed that the activities of the appellant clearly fall under the definition of cargo handling service.

In order to deliver cement to consumers in various locations throughout Tamil Nadu, the appellant loads cement from containers at the Railway Goods Shed onto trucks. The appellant further acknowledged that he was unloading cargo from vehicles at M/s. J.K. White Cement Works' godown.

The appellant admitted to have registered with the Department under Goods Transportation Agency, but had not paid any tax.

The department issued a Show Cause Notice proposing to demand Service Tax under ‘Cargo Handling Service’ for the period from 24.12.2004 to 17.06.2008, appropriate interest under Section 75 of the Finance Act, 1994 and penalty under Sections 77 and 78 of the Finance Act.

The bench sought clarification to the board on the circular mainly addressed the issue in respect of a GTA who also incidentally and by virtue of a single composite contract, undertakes activities like loading/unloading, packing/unpacking, transshipment, temporary warehousing, etc., for which the GTA issues a consignment note.

In response to the same, the board clarified that the transportation is not the essential character of Cargo Handling Service, but only incidental to the same.

It was also clarified that where the service provider is registered under GTA and issues consignment notes for transportation of goods by road, then the service is to be treated as GTA and not Cargo Handling Service.

Further observed that the appellant, though claims to have registered under GTA, but there is a finding of fact that it has never paid any tax, which finding has not at all been disputed by the appellant.

Also, the appellant has also not shown anywhere that it has been issuing consignment notes in respect of the ‘GTA’ service apparently claimed by it, which is the requirement of the Circular.

According Section 65(23) of the Finance Act, 1994 defines “cargo handling service”, as under “cargo handling service” means loading, unloading, packing or unpacking of cargo..etc.

The appellant did not even submit ST-3 results within the required timeframe, according to the bench of Vasa Seshagiri Rao and P. Dinesha. The tribunal is convinced that even the appellant's claim that the extended period of limitation was invoked is incorrect.

To Read the full text of the Order CLICK HERE

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A. Vijayakumar vs Commissioner of Central Excise and Service Tax , 2023 TAXSCAN (CESTAT) 581 , Shri D. Jaishankar , Shri R. Rajaraman