GUDWIN LOGISTICS Vs. COMMISSIONER OF C. EX., VADODARA

JUDGEMENT

(1.) THE appellant is engaged in providing services to the customers in port area. The services provided by them in the port area are namely getting the goods fumigated, loading and unloading, stuffing goods in containers, labour charges for stuffing the containers, facilitating clearance of imported cargo and also arranging ocean transport. The appellants paid the required charges to the service providers for various services mentioned above in the port area and recovered the same from the customers by adding their service charges. Initially they had taken registration as a CHA and paid the Service tax. After taking the registration they were paying Service tax on the charges received by them excluding the actual cost. The Department took a stand that in the absence of having a licence, appellant cannot be treated as a CHA. Thereafter, verification of records, investigation etc., show cause notice was issued proposing to classify the services rendered by them in the category of clearing and forwarding agency service. After adjudication process in the impugned order Commissioner has classified their service as clearing and forwarding agency service and has demanded Service tax of Rs. 1,66,25,591/ - for the period from 1 -4 -2006 to 31 -3 -2007. Penalties have also been imposed under various sections of Finance Act, 1994.

(2.) LEARNED Advocate on behalf of the appellants submits that the service rendered by the appellants is neither CHA service nor clearing and forwarding agency service. He relies on the Circular issued by the Board in support of his contention that service rendered by the appellants cannot be considered as clearing and forwarding agency service. He also submits that while demanding Service tax, full Service tax has been demanded on the amount collected by them even though such amount consists of charges for the services provided and their commission/service charge and the service charge collected by them forms a very small percentage of the total amount collected. Out of the total of more than of Rs. 13.59 crores collected by them from the customers for various services rendered, more than Rs. 12.9 crores accounts for actual expenses and charges paid to various services and ocean freight. He submits that Service tax could not have been charged on the full amount. He also relies upon the decision of the Honble High Court of Punjab and Haryana in support of his contention that the service provided by them is not clearing and forwarding agency service at all in view of the fact that they do not undertake any clearing activity. Honble High Court has held that unless a person undertakes both clearing and forwarding activities, the liability of Service tax is not attracted. He also relies upon the decision of the Tribunal in DHL Lemuir Logistics (P.) Ltd. v. CST, Bangalore reported in 2010 (17) S.T.R. 266 (Tribunal) = 2009 (22) STT 398 (BANG. -CESTAT) in support of his contention that all the activities conducted by the appellants cannot be categorized under one category and charged to Service tax. Assuming but not accepting that Service tax is leviable, the total amount of tax that may be payable would not exceed Rs. 8,00,000/ - in view of the fact that the service charges received by them is a small percentage of the actual expenses incurred on various services.

(3.) LEARNED DR on the other hand submits that the Larger Bench has considered this issue and the observations made by the Larger Bench in Medpro Pharma Pvt. Ltd. reported in 2006 (3) S.T.R. 355 (Tribunal) are applicable to the present case. Further, he also stated that the statement of the partner shows that the services provided by the appellants is in the nature of clearing and forwarding agency service.