The Customs, Excise & Service Tax Appellate Tribunal, Chennai quashed the penalty while observing that the service tax is not paid on bonafide belief of handling export cargo.
The bench noted that the appellant has to abide and fulfill all the conditions mentioned under Regulation 5 and discharge all the responsibilities prescribed in Regulation 6 of the Handling of Cargo in Customs Area Regulations, 2009.
The bench observed that the main ground on which the show cause notice has been issued is that the activity in the nature of tracking of delivery schedule, managing distribution and logistics would give the essential character of the composite activities carried out by the appellant and the service is thus to be classified under Business Support Services (BSS).
It was also noted that the service in the category of BSS is in the nature of service that is to be provided to a business or commerce. In other words, these activities are in the nature of providing support or facility to another for business or commerce. BSS intends to bring within the service tax net various outsourcing services.
The bench stated that the appellant does not support the business of any other. They export the cargo of customers. The tracking of delivery schedule etc. is done to ensure the safety and transit of the cargo. So also, they are responsible under various provisions of Customs Act and Rules and have to report compliance for the transit of the cargo within the port area.
“Merely managing the cargo within the CFS area does not mean that the appellant is providing a Business Support Service”, the tribunal said.
This being the nature of activities carried out by the appellant, the bench did not find any ingredients which attract the levy of service tax under BSS.
“Even by the SCN it is seen that the appellants have been given the license as Customs Cargo Service Provider (CFS agent) and are providing the services of handling cargo. When the Customs department has issued a licence for providing service of cargo at port area, the service tax wing has wrongly sought to bring the consideration received by them to be for supporting business of another under BSS”, the tribunal observed.
Facts
The appellant was appointed as ‘Customs Cargo Service Provider’ by the Commissioner of Central Excise & Customs, Coimbatore under the Handling of Cargo in Customs Area Regulations, 2009 in regard to Container Freight Station (CFS).
According to Department, as part of operations, the appellant receives cargo bound for export, unloads, stacks and stores them in the warehouse at CFS, opens the packages and produces them to the examining customs officers, repacks them when required, arranges for containers, trailers, trucks for transit of cargo to the gateway ports, handles the container / cargo and loads the cargo on to the containers / trucks.
During audit of accounts for the period April 2008 to June 2012, it was noted that the appellant has not paid service tax on certain amounts received for providing services while operating as ‘Customs Cargo Service Provider’. Therefore, show cause notice dt. 21.10.2013 was issued for the period 2008-09 to April-June 2012. After due process of law, the original authority confirmed the demand, interest and imposed penalties. Aggrieved by such order, the appellant is now before the Tribunal.
Case Information
Case Name: M/s. Indev Logistics Private Limited v/s The Commissioner of CGST & Central Excise
Judicial Level & Location : CESTAT Chennai
Case Number : Service Tax Appeal No. 40541 of 2015
Date of Decision : 31/07/2024
Decision in favor of: Appellant
Members: Ms. Sulekha Beevi.C.S., Member (Judicial) And Mr. Vasa Seshagiri Rao, Member (Technical)
Counsel for Petitioner : Shri M. Ponnuswamy, Consultant
Counsel for Respondent : Shri N. Sathyanarayanan, Authorized Representative
