Loading of Goods for Transport Taxable as Cargo Handling Service Even Pre-2008: CESTAT Hyderabad

April 1, 2026 : The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Hyderabad Bench, has held that loading of goods onto trucks for transportation to customers qualifies as “cargo handling service” (CHS) and is liable to service tax even for the period prior to the 2008 amendment to the statutory definition.

The Bench comprising A.K. Jyotishi (Technical Member) and Angad Prasad (Judicial Member) partly allowed the appeal filed by M/s Agarwal Global Steels Ltd., upholding the service tax demand of ₹6,02,741 while setting aside penalties.

The dispute arose from an Order-in-Appeal dated 19 November 2012 passed by the Commissioner (Appeals), Hyderabad-IV, which confirmed the demand on the ground that the appellant had collected loading charges from customers but failed to discharge service tax on such amounts.

The appellant, engaged in transport of goods by road and registered under the relevant service tax category, argued that mere loading of goods could not be classified as cargo handling service, particularly prior to 2008 when the statutory definition referred only to “cargo” and not “goods.” It was contended that goods become “cargo” only after transportation begins and therefore loading activity fell outside the tax net.

Rejecting this contention, the Tribunal held that goods loaded onto trucks for delivery are clearly intended for transportation and therefore assume the character of “cargo.” It observed that such loading activity squarely falls within the scope of cargo handling service even prior to the 2008 amendment. The Bench also distinguished the judicial precedents cited by the appellant, noting that those cases involved different factual contexts such as activities confined within factory premises or services integrally linked to transportation, unlike the present case where separate loading charges were collected.

Accordingly, the Tribunal upheld the service tax demand on merits, confirming that the appellant was liable to pay tax on loading charges for the relevant period.

On the issue of penalties, however, the Tribunal granted relief. It accepted the appellant’s plea of bona fide belief, noting that there was ambiguity in the legal position and divergent judicial views on the taxability of such activities. The Bench observed that the appellant had reasonable cause for non-payment, including the understanding that loading was incidental to sale and subject to VAT. Invoking Section 80 of the Finance Act, 1994, the Tribunal set aside penalties imposed under Sections 77 and 78.

The appeal was thus partly allowed, with the demand sustained and penalties waived.

Cause Title: M/s Agarwal Global Steels Ltd. v. Commissioner of Customs, Central Excise & Service Tax, Hyderabad-IV
Case No.: Service Tax Appeal No. 25817 of 2013
Coram: A.K. Jyotishi (Technical Member), Angad Prasad (Judicial Member)