2018 (10) TMI 36 – CESTAT CHENNAI – TMI – Business Auxiliary Services” (BAS) / Business Support Service (BSS) – appellants were engaged in Courier activity, later on investigation it emerged that they were collecting certain charges as ‘crossing over charges’, raised on their sub-franchisee agencies located in other parts of Tamil Nadu for the purpose of enabling further movement of documents, which originated from their sub-franchisees’ end.
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Held that:- It is but evident that the various franchisees spread over Tamil Nadu and the assessees based in Chennai, are operating in the hub-and-spoke business model. The documents from each of these TPC franchisees may be sent to the TPC hub at Chennai wherefrom they will be further sent onwards to various other TPC hubs in other parts of the country for further distribution. This being the case, crossing over charges are being collected only for the intra-movement of courier packages within the hub-and- spoke arrangement, namely with th
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e agencies located in other parts of Tamil Nadu for the purpose of enabling further movement of documents, which originated from their sub-franchisees end. It appeared to the department that the activities of the assessees falls under Business Auxiliary Services (BAS) / Business Support Service (BSS). Hence a show cause notice No.68/2008 dt. 03.07.2008 was issued to appellants inter alia, proposing demand of service tax liability on the crossing over charges for the period 10.09.2004 to 30.04.2006 under BAS and for the period 01.05.2005 to 30.09.2007 under BSS along with interest and imposition of penalties. In adjudication, original authority confirmed the demand of ₹ 12,91,668/- for the period 10.09.2004 to 30.04.2006 under BAS and ₹ 16,42,302/- for subsequent period under BSS with interest thereon. Equal penalty was imposed under Section 78 of the Finance Act, 1994. Penalty was also imposed under Section 77. On appeal, the Commissioner (Appeals) vide impugned order No.18
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er by single network. All the transactions are taking place only in the name TPC. In the circumstances, there is no service rendered to any third party and hence, there is no rendering of any Business Supportive Service. Moreover, admittedly, the entire activity is within TPC only. ii) The definition of Business Auxiliary Service cannot be applied in as much as the transaction is between the same network for the completion of the Courier Service and the Service for the self. There is no client and service provider relationship in the present case. Hence service provided by self to self only and the same cannot be exigible to service tax liability. Ld. Advocate placed reliance on Final Order No.42181/2018 dt. 01.08.2018 of CESTAT Chennai in the case of Concord Express Logistics India Pvt. Ltd. iii) The activity of TPC is similar to Co-loader. This Hon ble Tribunal in the case of Concord Express Logistics India Pvt. Ltd., Vs. CST. (supra) has held that the demand of service tax on the co
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hat service category of BSS was carved out of BAS only. He placed reliance on the Tribunal decision in DTDC Courier & Cargo Ltd. CCE & ST Bangalore – 2012 (26) STR 365 (Tri.- Bang.). Ld. AR also submits that the Board s Circular No.341/43/96-TRU dt. 1.11.1996 has no relevance to the present case since that was a clarification in respect of co-loaders. However in the instant case, the assessee were collecting crossing charges from their sub-franchisee agencies located in other parts of Tamil Nadu. He drew our attention to para-6 of the SCN dt. 3.7.2008 giving narration of statement of A. Mohideen Gani, Authorized person of the assessee recorded on 3.10.2007, where he has inter alia stated that crossing over charges are being collected towards logistic support and other support activities provided to the franchisee. For example, a document is booked at Trichy for destination to Mumbai. The said document comes to Chennai and the same is transferred to Mumbai. The charges incurred
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he alternate argument of the Ld. Advocate that activity involved in the present case is a continuous service of courier by single network and the transaction is between the same network for the completion of courier service, hence the service is being given to self. We note that from para-13 of the order of original authority dt. 30.07.2009, that the assessee in their reply to SCN had clarified and confirmed that TPC centers spread across different stations are belonging to one network community called TPC network ; that the charges for such enabling activity is exactly more or less to cover the expenditure involved in such re-routing by the center which is engaging such re-routing and the nomenclature is referred to as crossing charges; that the rate structure has been prescribed amongst the TPC network. It has also been submitted that as the TPC centers are to be considered as single network, they cannot be brought under the definition of client , there is no third party relationship
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present case the impugned services within the TPC network is nothing but a continuation or culmination of courier services only. It then cannot be alleged that TPC receiving or giving of services within its own network of the assessee will render them liable to service tax levy. In the event, upholding of the demand under BSS by the lower appellate authority cannot be sustained and is therefore set aside. Appeal No.ST/57/2012 of the assessee succeeds and is allowed, with consequential benefits, if any, as per law. 5.3 Coming to the department appeal, for the same reasons discussed herein above, we hold that impugned services cannot also fall under BAS for the period prior to 1.5.2006. We therefore find no merit in department appeal. In consequence Appeal ST/54/2012 is dismissed. 6. To sum up – Assessee appeal ST/57/2012 is allowed Department appeal ST/54/2012 is dismissed. (operative part of the order pronounced in court) – Case laws – Decisions – Judgements – Orders – Tax Management
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