DEEP CHEMICALS Vs. COMMISSIONER OF SERVICE TAX, AHMEDABAD

JUDGEMENT

(1.) THE appellants are Clearing and Forwarding cum Re -packing agent of M/s. Tata Chemicals (herein referred to as T.C.L.) for the product Common Salt and Soda Ash manufactured by T.C.L. The appellants, in addition to the charges of C&F agency, were also recovering additional amount as Storage and Warehousing charges, Cargo handling charges and Packing charges. In the impugned order, it has been held that they are liable to pay Service Tax on these charges and consequently, the service tax amounting to Rs. 6,15,146/ - for the period August, 2002 to November, 2006 has been demanded and penalty has also been imposed under various Sections of the Finance Act, 1994.

(2.) THE learned Chartered Accountant Shri Sandeep Sachdeva, appearing on behalf of the appellants submitted that the appellant was providing only C&F agent services and not other services for which they were held liable to Service Tax. He submits that when other services provided are incidental and not form an integral part of the main service, there is no need to separately pay the service tax. In this regard, he cited the decision of the Tribunal in the case of Gujarat Chem. Port Terminal Co. Ltd. v. CCE, Vadodara -II - 2008 (9) S.T.R. 386 (Tri. -Ahmd.). He also submitted that the purpose of determining the value of the services provided by C&F agent, reimbursement of actual expenses by the principal towards freight, labour, electricity, telephone etc. are not includible. He cites the decision in case of Sangamitra Services Agency v. CCE, Chennai - 2007 (8) S.T.R. 233 (Tri. -Chennai) in support of his argument and also the Tribunals decision in case Aurobindo Pharma Ltd. v. CCE, Visakhapatnam -I - 2008 (10) S.T.R. 611 (Tri. -Bang.) and Keralam Enterprises v CCE, Cochin - 2008 (9) S.T.R. 503 (Tri. -Bang.). Further, the taxable services in respect of storage and warehousing is a service provided to any person by a storage and warehouse keeper in relation to the storage and warehousing service. The appellants are C&F agents and not storage and warehouse keeper. According to him, the service attract levy only when such services are provided to general public and not in the case of cases like that of appellant where such service is being provided only to the person for whom they are acting as C&F agent. He also stated that the amount of charges for loading/unloading the goods will not be liable to service tax under cargo handling service and he submits that the activity of loading and unloading is incidental to C&F agency and he cites the decision of the Tribunal in the case of CCE, Bhubaneswar v. B.K. Thakkar - 2008 (9) S.T.R. 542, wherein it was held that the activity of loading/unloading of the goods is incidental to the mining activity and hence will not be liable to service tax under cargo handling service. He also submits that fixed expenditure recovered would not be liable to service tax under packing service. Learned J.D.R., on the other hand, submits that according to the agreement entered into between the parties, the appellant is designated not only as C&F agent, but also as a repacking agent. He submits that the activity of repacking is clearly business auxiliary service. He also submits that the appellant have tried to reduce the service tax by segregating different expenses, salary etc.

(3.) TAKING note of all these factors, we consider that it would be appropriate to require the appellants to deposit 20% of the service tax demanded for the purpose of Section 35F of C.E.A., 1944 and subject to the deposit of this amount within eight weeks from today and report compliance on 13 -8 -09. Subject to pre -deposit as above, we allow the stay petition as regards balance amount of service tax, interest demanded and penalties imposed during the pendency of the appeal.