Transportation And Distribution Of Newspapers Doesn’t Constitute Taxable ‘Cargo Handling Service’: CESTAT

The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside a service tax demand of Rs. 9.56 lakh raised against Jaipur-based proprietor held that the activity of transporting and distributing newspapers does not constitute taxable “Cargo Handling Service” and is covered under the negative list of services under the Finance Act, 1994. The Bench of Binu Tamta (Judicial Member) and P.V. Subba Rao (Technical Member) examined the agreement between the parties and noted that the principal objective of the contract was the transportation and distribution of newspapers from the printing press to designated centres. The Tribunal observed that loading, unloading and other related activities were merely incidental and ancillary to the transportation function. The case arose from proceedings initiated by the Service Tax Department against M/s Chuttan Lal Agarwal, a sole proprietorship engaged in the transportation and distribution of newspapers printed by Dainik Bhaskar Limited (DBL). Under an agreement with DBL, the appellant was responsible for distributing newspapers, magazines and supplements from the printing press to various designated centres. The work also involved activities such as binding, counting, bundling, packaging, loading and unloading. Based on information received from the Income Tax Department regarding Tax Deducted at Source (TDS) on receipts amounting to ₹77.39 lakh during the financial years 2013-14 and 2014-15, the Service Tax Department issued a show cause notice demanding service tax of ₹9,56,540 along with interest and penalties. The Department alleged that the appellant had failed to obtain service tax registration, file ST-3 returns and discharge service tax liability. The adjudicating authority and the Commissioner (Appeals) concluded that the appellant was not merely transporting newspapers but was also carrying out activities such as packing, loading and unloading. Based on these ancillary activities, the authorities classified the service as “Cargo Handling Service” and denied the benefit of exemption claimed by the appellant. The Department further argued that the exemption relating to transportation of newspapers under Notification No. 25/2012-ST was applicable only to Goods Transport Agency (GTA) services, whereas the appellant had himself stated that he was not providing GTA services. Consequently, the demand, interest and penalties were confirmed. The appellant challenged the demand on multiple grounds, contending that the authorities had incorrectly classified the service and travelled beyond the allegations contained in the show cause notice. It was argued that the entire activity was essentially related to the supply and transportation of newspapers and that no service tax was payable because such services were exempt or otherwise covered by the negative list provisions. The appellant also submitted that no service tax had been charged from Dainik Bhaskar or collected in any invoice, as the services were believed to be non-taxable. Further, the demand was based solely on third-party income tax data without examining the true nature of the activity being performed. The Tribunal also relied on the appellant’s Income Tax Returns, which showed ownership of a vehicle and expenditure on vehicle hiring charges, indicating that transportation was the core activity being undertaken. A key issue before the Tribunal was the applicability of Section 66D(p) of the Finance Act, 1994, which formed part of the negative list regime during the relevant period. The provision excluded from service tax services relating to transportation of goods by road, except where provided by a Goods Transport Agency or courier agency. The Tribunal observed that although the appellant had raised this contention before the lower authorities, it had not been properly examined. After reviewing the facts, the Bench concluded that the activity was essentially transportation of newspapers by road and therefore fell within the scope of Section 66D(p). Holding that the contract was a composite transportation arrangement and that the ancillary activities could not alter its essential character, the Tribunal ruled that the classification under “Cargo Handling Service” was unsustainable. It held that the transportation and distribution of newspapers undertaken by the appellant was covered by the negative list and therefore not liable to service tax. Since no service tax liability existed, the Tribunal found it unnecessary to examine the other grounds relating to limitation, interest and penalties. The order was set aside and the appeal was allowed in favour of the taxpayer. Case Details Case Title: M/s. Chuttan Lal Agarwal Versus Commissioner of CGST and Central Excise Citation: JURISHOUR-1527-CES-2026(DEL) Case No.: Service Tax Appeal No.50403 of 2021 Date: 03.06.2026 Counsel For Appellant: J. Kainaat, Advocate Counsel For Respondent: Shashank Yadav, Authorised Representative Click Here To Read Order Read More: No Cash Fee For Audit Firms, Just Digital Payments: ICAI

Transportation And Distribution Of Newspapers Doesn’t Constitute Taxable ‘Cargo Handling Service’: CESTAT

Membership Required

Latest articles

Services Used for Setting Up Factory Continue to Qualify as ‘Input Services’: CESTAT

Customs Can’t Enhance Import Value Solely on NIDB Data Without Proof of Comparable Imports: CESTAT

Bona Fide Mistakes Shouldn’t Defeat Substantive Tax Rights: Karnataka High Court Allows Correction of GST DRC-03 Filing Error

Procedural Delay Should Not Defeat Scheme Benefits: CESTAT Directs Manual Processing of SVLDRS Discharge Certificate

More like this

Services Used for Setting Up Factory Continue to Qualify as ‘Input Services’: CESTAT

Customs Can’t Enhance Import Value Solely on NIDB Data Without Proof of Comparable Imports: CESTAT

Bona Fide Mistakes Shouldn’t Defeat Substantive Tax Rights: Karnataka High Court Allows Correction of GST DRC-03 Filing Error

About us

Company

Categories