Order Date – 14 December 2023

Parties: M/s. T. Kolandasamy Vs The Commissioner of Central Excise

Facts –

• The Appellant, M/s. T. Kolandasamy, was providing clearing and forwarding services to M/s Ultra Tech Cements and M/s Zuari Cements. According to the agreement with M/s Ultra Tech Cements, the appellant discharged service tax on the amount collected from M/s Ultra Tech excluding the freight. The appellant had raised separate invoices as “secondary bills‟ for the lorry freight charges without mentioning the service tax element. 
• In respect of M/s Zuari Cement a single agreement was entered and a single bill was raised. Accordingly show cause notice was issued for the period April 2009 to September 2011 invoking the extended period and proposing to demand the short paid service tax along with interest and for imposing penalties.

Issue –

• Whether the demand raised alleging that appellant had to include freight charges in the taxable value for C & F service is legal and proper 

Order –

• The Tribunal observed that there is short payment of tax as the appellant has to include the freight charges in the taxable value for the reason that appellant had provided such services as part of Clearing and Forwarding Agency services. The issue on merits is answered against the appellant and in favour of Revenue.
• It is seen that the appellant had entered into separate agreements only because, the customer, M/s Ultra Tech intended to shoulder the liability to pay service tax on the freight charges. It is also seen that M/s. Ultra Tech Ltd has discharged the liability under GTA services, which would indicate that the appellant by bifurcating the contract had no intention to evade payment of service tax.
• The appellant had collected the freight charges by a separate invoice and this was properly accounted. So also they were under the bonafide belief that as M/s. Ultra Tech Cement Ltd was discharging the service tax under GTA, and that appellant is liable pay service tax on freight charges under C & F services.
• Therefore the appellant has made out a strong case on the ground of limitation. The show cause notice issued invoking the extended period is cannot sustain. The impugned order is modified to the extent of the setting aside the demand and interest and penalties for the extended period. The appeal is partly allowed.