Service Tax Exemption On Handling Of Agriculture Produce By A Cargo Handling Agency: CESTAT

The Ahmedabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that service tax is exempted from the handling of agricultural produce by a cargo handling agency.

The bench of Ramesh Nair (Judicial Member) and C.L. Mahar (Technical Member) has noted that as per Notification No. 10/2002-Service Tax dated. 01.08.2002, the government exempts the taxable service provided to any person by a cargo handling agency in relation to agricultural produce or goods intended to be stored in cold storage from the whole of the service tax levy.

The appellant or assessee is in the business of providing the service under the category of "port service," classifiable under Section 65 (105) (zn). The appellant obtained service tax registration with effect from July 27, 2007. The appellant had been providing port services since 2005.

The department has held that the appellant had not discharged their tax liability amounting to Rs. 7,37,766 during the period 2005–06, i.e., prior to obtaining service tax registration. The department alleged that the appellant has suppressed its taxable value and failed to pay another tax liability of Rs. 69,85,088 for the period 2006–07 to 2009–10. An amount of Rs. 33,12,188 already deposited by the appellant has been appropriated in the order towards their total tax liability of Rs. 77,22,854.

The appellant contended that the service under the category of "port service" also included the service of "cargo handling service," since the service provided by them was a cargo handling service. Therefore, they were eligible for the benefit of service tax exemption under Notification 10/2002-ST dated August 1, 2002, which exempted cargo handling services provided to any person by a cargo handling agency in relation to agricultural products.

The department contended that the service provided by the appellant was duly covered under the category of "port service" defined under Section 65(105)(zn). The benefit of Notification No. 10/2002-ST dated August 1, 2002 was not admissible to the appellant since the benefit was available for the service of "cargo handling service" only and not to the "port service" provided by the appellant.

The tribunal noted that the exemption is provided for the handling of agricultural produce by a cargo handling agency and is not service-specific, whether for "cargo handling service" or "port service". Cargo handling agencies can handle agricultural produce within or outside the port. Thus, the appellant was eligible for the benefit of notification no. 10/2002-ST dated August 1, 2002.

Case Title: Elegant Surveyors Versus C.C.E. & S.T.-Rajkot

Case No.: Service Tax Appeal No.10371 of 2013

Date: 11.04.2023

Counsel For Appellant: Mihir Gupta, Mayank Jain

Counsel For Respondent: Vijay G. Iyengar

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