FLYJAC LOGISTICS Vs. COMMISSIONER OF SERVICE TAX

JUDGEMENT

(1.) AFTER examining the records and hearing both sides, we note that the adjudicating authority demanded service tax of over Rs. 1.33 crores from the appellants in various categories for the period 16.8.2002 to 31.3.2006, denied CENVAT credit to the extent of over Rs. 10.8 lakhs and imposed penalties on the party. The impugned demand is in the category of "Cargo Handling Services", "Business Auxiliary Services" and "Goods Transport Agency Services". It appears from the records that, towards the demand in the category of GTA service, the party has already paid Rs. 1 lakh and that, towards the demand of service tax of Rs. 18 lakhs in the category of "Business Auxiliary Service", they paid an amount of Rs. 10.81 lakhs. It further appears that CENVAT credit of Rs. 10.81 lakhs was reversed by the party. The debate, for the present, is shifting to 'Cargo Handling Services'. The demand in this category is to the tune of Rs. 1.16 crores. It is the case of the appellants, reiterated today by their Chartered Accountants, that they did not handle the cargo. It is claimed that all the amounts considered by the adjudicating authority for the levy of service tax in the category of "Cargo Handling Services" are amounts paid to various agencies and reimbursed by the importers without having to do anything physically with the goods. In this connection, reference has been made to the definition of "Cargo Handling Service" given under Section 65(23) of the Finance Act, 1994. According to this definition, the service includes loading, unloading, packing or unpacking of cargo and also includes cargo handling services provided for freight in special containers or for non -containerized freight. The service also includes all modes of transport and cargo handling services incidental to freight but does not include mere transportation of goods. It appears from the records that the activities considered by the adjudicating authority in the category of "Cargo Handling Service" are bulk -breaking, document courier, cargo consolidation etc. The case of the appellants is that all these activities were performed by those who have had the custody of the goods at the appropriate stage. They claimed to have had no custody of the goods at any stage. Ld. SDR has reiterated the findings of the Commissioner.

(2.) AFTER giving careful consideration of the submissions, we find that the facts relating to "Cargo Handling Services" require a closer study, which can be had at the final hearing stage. For the present, we feel like giving the benefit of doubt to the appellants in respect of some of the activities considered by the Commissioner for levy of service tax from the appellants in the category of "Cargo Handling Service". In respect of certain other categories such as bulk breaking, the appellants seem to have failed to make out a prima facie case. On an over -all consideration of the case, we direct the appellants to predeposit an amount of Rs. 20,00,000/ - (Rupees Twenty lakhs only) for the purpose of Section 35F of the Central Excise Act as made applicable to service tax matters. We have granted waiver of predeposit and stay of recovery in respect of the demands raised on the appellants on other counts. Further, there will be waiver of predeposit and stay of recovery in respect of the demand raised in the category of "Cargo Handling Services", over and above the amount of Rs. 20 lakhs directed to be predeposited. There will be waiver of predeposit and stay of recovery in respect of the penalties as well. Deposit the amount within 4 weeks and report compliance on 9.7.2008.