The Customs, Excise & Service Tax Appellate Tribunal, Chandigarh declared M/s ATA Freight Line Private Limited not liable for Service Tax on transportation services.
Facts
The appellants, M/s ATA Freight Line Private Limited, are duly registered with Service Tax; an Audit of the records of the appellant was conducted and it appeared that the appellants were engaged in the transactions and that they did not pay appropriate Service Tax on the services rendered/availed. The appellants, under an Agreement with their principals i.e. ATA, USA provide services to them and receive services; they bifurcate the charges for ex-work services, handling charges and sea freight charges payable to each other; these services are in the nature of transportation of goods provided to the principals; the appellants were required to discharge Service Tax as the service is rendered in the country.
A show-cause notice was issued to the appellant seeking to recover Service Tax of Rs.2,80,26,749/- along with interest while seeking to impose penalties under Sections 76, 77 & 78 of the Finance Act, 1994; the said show-cause notice has been confirmed by the Commissioner (Audit), CGST.
Submissions
Advocate Mahesh Raichandani, appearing for the appellants, submitted that the appellant reserves space in carrier vessels or aircrafts for export of cargo; the appellant does not have contract with the carriers but reserves space on spot rates and books space on various vessels/ aircrafts.
Nikhil Kumar Singh, Authorized Representative for the Department reiterated the findings of the impugned order and submitted that the appellant‟s contention on the discount received for booking the space in aircrafts/ vessels is an accrual of gain and not consideration for an activity is mis-placed.
Decision
The two member bench of S. S. Garg Member (Judicial) And P. Anjani Kumar Member (Technical) found that the Revenue has picked up some activities, from the bundle of services rendered by the appellants, in a convenient manner. One has to see the nature of the service in total. Segmenting the series of actions involved in the provision of a particular service, would result in ridiculous propositions. The Department has not viewed the service rendered by the appellants in a holistic manner, ignoring the very fact that the services rendered by the appellants are not complete just by loading of the goods on a vessel or on an aircraft. They go beyond.
The bench observed that if the case of the Department is accepted, the provisions of Section 66F of the Finance Act, 1994 would become redundant. Such an approach is not permissible under the law.
The bench held that the amounts collected by the appellants from the Indian clients is towards the expenditure such as customs duty, delivery order charges, port handling at the foreign ports; as the charges pertain to the activity rendered at a foreign destination, the same cannot be charged in India.
The Tribunal did not find any type of service rendered by the appellants in regards to promotion of the business of their Indian clients. Their activity and the payments received thereof squarely fall under the main activity of goods transport operator or cargo handler.
Case title: M/s ATA Freight Line Private Limited v/s The Commissioner of Central Excise And Service Tax, Gurugram
Citation: Service Tax Appeal No.60105 Of 2022
