By Puloma Dalal, Jayesh Gogri, Chartered Accountants
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Air cargo handling service: Short duration of time taken for unloading, x-raying, etc. of export cargo and passenger baggage cannot be said to be time of storage or warehousing of goods.
Facts:
Appellant maintained a terminal at the Trivandrum airport. Air cargo for export and passenger baggage for transport was brought for unloading, x-raying & transporting of goods by airline officials or employees/ agents of cargo owners. There was a time lag between the arrival of the cargo/passenger baggage at the appellant’s terminal and shipment by air. In case the time of retention of cargo/passenger baggage at the terminal was beyond 48 hours, appellant charged and discharged liability of service tax under “storage & warehousing services”.
The appellant contended that the Department cannot bring to tax a service which enjoys exemption under one entry of the Act (that is Cargo Handling Service which exempts export cargo and passenger baggage from the levy of the tax) by resorting to another charging section of the very same Act. Reliance was placed on Air India Ltd vs. Cochin International Airport 2010 (1) KLT 190 and on Circular No. B11/1/2002 dated August 01, 2002.
The Department concluded that the appellant was not carrying on cargo handling services but the activity of the appellant was taxable under the “Storage & Warehousing services’ and hence demanded tax.
Tribunal held that in case the cargo/passenger baggage retained for a shorter period (less than 48 hours) is not conclusive of the fact that it is not storage and warehousing services. It held that the retention of cargo/passenger baggage by the appellant irrespective of the period shall also be covered under the “Storage & Warehousing services”.
Held:
Even though the Circular B11/1/2002 dated 1st August, 2002 was issued with reference to another charging section, what is clear from the circular is that the intention of the Government is to avoid incidence of tax on export cargo and passenger baggage. Further, the Department or the Tribunal made an inquiry as regards whether the appellant was charging various rates for the same service depending upon the period of retention of the goods, the additional charges recovered could be attributed to the storage and warehousing service and be subjected to service tax. Hence the matter was remanded to the Department for conducting enquiry. If the appellant is liable to service tax following our judgment, there is no scope of penalty as no contumacious conduct can be presumed in this matter.
