Custom, Excise & Service Tax Tribunal
Hindustan Steel Works Construction Ltd vs Visakhapatnam-I on 21 November, 2025
(1)
ST/713/2010 & ST/228/2011
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH AT HYDERABAD
Division Bench - Court No. - I
Service Tax Appeal No. 713 of 2010
(Arising out of Order-in-Original No.11/2009 (RS) dt.19.11.2009 passed by Commissioner
of Customs, Central Excise & Service Tax, Visakhapatnam-I)
M/s Hindustan Steelworks
Construction Ltd ......Appellant
PO Box No.30, Visakhapatnam,
Andhra Pradesh - 530 001
VERSUS
Commissioner of Central Excise &
Service Tax, Visakhapatnam - I
Port Area, Visakhapatnam,
......Respondent
Andhra Pradesh - 530 035 AND Service Tax Appeal No. 228 of 2011 (Arising out of Order-in-Original No.01/2010 (PVR) dt.29.01.2010 passed by Principal Commissioner of Customs, Central Excise & Service Tax, Visakhapatnam-II) M/s Visakha Constructions D.No.26-40-3, Chaitanya Nagar, Old Gajuwaka, ......Appellant Visakhapatnam, AP - 530 035 VERSUS Commissioner of Central Excise & Service Tax, Visakhapatnam - II Port Area, Visakhapatnam, ......Respondent Andhra Pradesh - 530 035 Appearance Shri Nirmal Choudhary, Advocate & Shri A. Vamsi Rajesh, CA for the Appellants. Shri A. Rangadham, AR for the Respondent.
Coram: HON'BLE MR. A.K. JYOTISHI, MEMBER (TECHNICAL) HON'BLE MR. ANGAD PRASAD, MEMBER (JUDICIAL) FINAL ORDER No. A/30489-30490/2025 Date of Hearing: 29.07.2025 Date of Decision: 21.11.2025 (2) ST/713/2010 & ST/228/2011 [Order per: A.K. JYOTISHI] In Appeal No.ST/713/2012, M/s Hindustan Steelworks Construction Ltd (hereinafter referred to as HSCL) are in appeal against the Order of the Commissioner dt.19.11.2009, whereby, a total demand of Rs.4,44,37,689/- has been confirmed along with equal penalty for the period August, 2002 to March, 2007. Similarly, in Appeal No.ST/228/2011, M/s Visakha Constructions (hereinafter referred to as Visakha) are in appeal against Order of the Commissioner dt.29.01.2011, whereby, demand of Rs.2,92,75,232/- along with equal penalty has been confirmed by the adjudicating authority.
2. The brief facts of the case in respect of HSCL is that they are a Public Sector Undertaking (PSU) engaged in carrying out certain construction works and other related activities in the steel plant, power plant, railways, etc. The issue relevant to this appeal is that HSCL were awarded contract for working at Visakhapatnam Steel Plant by M/s Rashtriya Ispat Nigam Ltd (RINL) and the same work was further sub-contracted to Visakha. The department, based on certain evidence and statements recorded, felt that their activities would fall under different categories including Cargo Handling Services (CHS), Management, Maintenance or Repair Services (MMRS), Commercial or Industrial Construction Services (CICS) and Manpower Recruitment or Supply Agency Services (MRSAS). Whereas, in the case of Visakha, who were sub-contracted the work by HSCL, their activities were considered falling under the heading of CHS. Insofar as subject matter of demand under the head CHS is concerned, it is not in dispute that demands on both HSCL and Visakha are on the same set of activities, where HSCL has outsourced certain activities on sub-contract basis to Visakha.
3. Since the major part of demand is concerning with demand on CHS and the fact that both HSCL as well as Visakha have been demanded duty under the said category in relation to same activity, both the appeals are heard together for better appreciation of facts.
4. Learned Advocate for HSCL has primarily contested the demand on various grounds and for the sake of ease of reference, the arguments for difference services are summarized below.
(3)ST/713/2010 & ST/228/2011 Cargo Handling Service:
5. The demand is for the period October, 2002 to December, 2006 involving amount of Rs.3,02,57,095/- and Education Cess of Rs.4,16,140/-. Learned Advocate has highlighted that as is apparent from the SCN as well as the contract, their entire service was that of handling of finished goods and the same is nothing but internal shifting of goods within the plant premises, which is also corroborated by the statement of the Senior Manager, Finance, as also the observation made by the adjudicating authority at page 66 of the impugned order, where he has made an observation that the scope of the work is primarily handling of materials within the factory. According to him, the definition of CHS during the material time is specifically provided for handling of cargo, whereas, HSCL was not handling the cargo but were handling the goods. Further, since 'cargo' has not been defined in the statute, hence, dictionary meaning has to be relied upon, as per which, 'cargo' means goods and merchandise taken on boat, vessel or aircraft and the job must be provided by the cargo handling agency. It is evident that in terms of the contract, it only provides for handling of steel materials within the factory premises/stockyard. He also highlights that definition of cargo handling was amended from 16.05.2008, when inclusion of handling of goods was also made and therefore, prior to 16.05.2008, the goods were not within the purview of CHS. He has further argued that handling of cargo and simultaneous transportation of the goods for despatch outside the factory are totally absent in the facts of the case as supported by findings of the Commissioner himself at Para 17 & 18 observing that HSCL were engaged in the activities of handling of steel materials within the factory premises, though the goods were meant for transportation. They have relied on the judgment in the case of Modi Construction Company Vs CCE, Ranchi [2008 (12) STR 34 (Tri-Kol)]. This decision was upheld by Hon'ble Jharkhand High Court as reported in [2011 (23) STR 6 (Jhar)]. He has also relied on various other judgments, as under.
a) Gaytri Construction Co. Vs CCE, Jaipur [2012 (25) STR 259 (Tri-Del)]
b) Srinivasa Transports Vs CCE & ST, Visakhapatnam-I [2014 (34) STR 765 (Tri-Bang)] (4) ST/713/2010 & ST/228/2011
c) CCE & ST, Meerut-I Vs Jaspal Darshan Lal [2016 (45) STR 156 (Tri- All)]
d) CCE Vs Manoj Kumar [2015 (40 STR 35 (All)]
e) PR Nayak & Associates Vs CCCE & ST, Belgaum [2019 (26) GSTL 91 (Tri-Bang)] Management, Maintenance or Repair Service:
6. The demand is for the period July, 2003 to March, 2007 involving amount of Rs.95,98,924/- and Education Cess of Rs.1,18,139/-. Learned Advocate has submitted that the maintenance or repair service came into effect from 16.06.2005 and the major part of the demand is prior to 16.06.2005. Additionally, certain works mentioned in S.No.2,3,7 & 12 of the SCN cannot be classifiable under MMRS. He has also relied on certain case laws in support, as under.
a) CCE, Jaipur-II Vs Dusad Transformer & Switchgears P Ltd [2007 (5) STR 37 (Tri-Del)]
b) Uni Power System Ltd Vs CCE, Cochin [2007 (7) STR 590 (Tri-Bang)] Commercial or Industrial Construction Service:
7. The demand is for the period October, 2004 to March, 2007 involving amount of Rs.37,71,940/- and Education Cess of Rs.75,439/-, where three contracts have been examined. Learned Advocate has submitted that first contract is nothing but Works Contract service (WCS). Hence, demand cannot be made on this contract prior to 01.06.2007 and for the remaining two contracts, the contract is nothing but for repair and maintenance work and hence cannot be classifiable under CICS.
Manpower Recruitment or Supply Agency Service:
8. The demand is for the period July, 2005 to March, 2007 involving amount of Rs.1,96,090/- and Education Cess of Rs.3,922/-. Learned Advocate has submitted that the said service was brought into service tax net w.e.f. 16.06.2005, whereas, the work was done by supplying manpower prior to that date and bills were raised subsequently and hence, demand under this head also cannot be maintained (5) ST/713/2010 & ST/228/2011
9. On the issue of limitation, learned Advocate has submitted that HSCL, being PSU, where the work has been awarded by another PSU i.e., RINL, there could not be any element of suppression of facts with an intent to evade payment of duty and therefore, relying on various judgments, the allegation of malafide intent to evade payment of tax cannot be attributed to them for invoking extended period. Secondly, it was more of an issue of interpretation as it relates to dispute regarding classification and hence, relying on the judgment in the case of Coastal Energy Pvt Ltd Vs CCCE & ST, Guntur [2014 (310) ELT 97 (Tri-Bang)], which was affirmed by Hon'ble Supreme Court as reported in [2016 (340) ELT A204 (SC)], extended period cannot be invoked.
10. Learned AR, on the other hand, has reiterated the findings of the adjudicating authority in both the appeals. He has also relied on certain case laws, as under, in support that the activities carried out by HSCL and Visakha would be covered within the definition of CHS.
a) Coal Carriers Vs CCCE & ST, Bhubhaneswar [2011 (24) STR 395 (Ori)]
b) Shreem Coal Vs CCE, Bhubhaneswar-II [2016 (46) STR 24 (Tri-LB)]
c) Calcutta Industrial Corporation Vs CST, Kolkata [2019 (31) GSTL 487 (Tri-Kol)]
d) Sarvodaya Shramik Kalyan Samiti Vs CCE, Bhopal [2017 (52) STR 293 (Tri-Del)]
e) Maharaja Group & Associates Vs CCE, Raipur [2016 (41) STR 681 (Tri- Del)]
f) Nizam Singh Chauhan, VJ Trivedi Vs CCE [2016 (41) STR 928 (Tri- Del)]
g) Gajanand Agarwal Vs CCE, Bhubaneswar [2009 (13) STR 138 (Tri- Kol)]
11. Heard both sides and perused the records.
In Appeal No.ST/713/2010 - HSCL:
Cargo Handling Service:
12. We find that the main thrust of arguments is that HSCL were basically engaged through their sub-contractor in transportation of steel products within the periphery of steel plant area and therefore, will not come under (6) ST/713/2010 & ST/228/2011 the category of CHS and the dominant intent of the contract is handling of steel materials/goods and not cargo. It was also contended that there are many other activities which are included in the said contract i.e., cutting of material into pieces, bending of steel material, bundling of steel material, de-coiling, straightening and cutting, etc., in order to facilitate storage and inspection etc. The second argument is that as per the definition of CHS till 16.05.2008, the goods were not within the purview of the said heading and only post amendment goods as well as cargo were brought within the ambit.
We have gone through the scope of work, which essentially covers a broad range of activities. They are cited below for ease of reference.
a) Unloading including hand shunting from wagon at the siding in the stockyard, lifting/loading from unloading points, transportation to stacking points, unloading and stacking including dunnage of materials, blooms, billets and steel.
b) Transportation of materials by truck/trailer including weighment in between, unloading at stacking point and stacking including dunnage of materials, blooms from bloom storage yard, billets from mills and steel from mills, new steel yard, etc.
c) Removal of steel material from stack, lifting, loading from stacking point, transportation to the siding in the stockyard, unloading and loading into wagons as directed by VSP.
d) Removal of steel materials from stack and loading into customers/company's vehicles.
e) Removal of steel material from stack for stock verification and re- stacking, removal of steel material from stack and restacking for tendering, separation of specific heat.
f) Cutting of materials i.e., blooms, billets and steel into two pieces when required.
g) Bending of steel material when required.
h) Bundling of steel material when required.
i) De-coiling, straightening and cutting to straight length of 9-12 mtr and bundling or re-bar and plain wire rod coils.
13. We have also gone through some of the relevant judgments cited by HSCL in their support. In the case of Modi Construction Co (supra), the Coordinate Bench examined the scope of the contract and statutory (7) ST/713/2010 & ST/228/2011 provisions in terms of section 65(105)(zr) of the Finance Act, 1994 and also the definition of CHS and thereafter, inter alia, held that what is essential for this service is that the service provided should be relating to or in relation to cargo handling by a cargo handling agency and that said service should be integrally or inseparably connected with handling of cargo or attributable thereto without being mere activity of transportation of such cargo. Since transportation service, independent of cargo handling, is an exception under the scheme of levy by section 65(23) of the Act. Thereafter, the scope of activity carried out by the appellant inside the plant was not considered as falling under the category of CHS. In this conclusion, they have also relied on the judgment of Coordinate Bench in the case of Sainik Mining & Allied Services Ltd Vs CCCE & ST, Bhubhaneswar [2008 (9) STR 531 (Tri-Kol)]. Para 5 is cited below for ease of reference.
"5. Looking to the admitted facts of the case and finding Adjudicating Authority which remained uncontroverted throughout, applying aforesaid interpretation of the law, it may be held that the scope of activity carried out by the Appellant, inside the plant does not call for taxation under the class cargo handling service following decision of this Bench in the case of Sainik Mining & Allied Services Ltd. v. Commr. of CEx., Cus. & S.T., BBSR
- 2008 (9) S.T.R. 531 (Tri.-Kol.). For convenience of reading Para-8 of the decision is reproduced as under :-
"8. We find that the activity undertaken by both the appellants for mechanical transfer of coal from the coal face to tippers and subsequent transportation of the coal within the mining area, does not come under the purview of cargo handling service. The dominant activities undertaken by the appellants under the contract in question are primarily the movement of coal within mining area and transfer of coal from the coal face to the tippers, if at all, includes loading and unloading which are merely incidental. Cargo in commercial parlance has a definite connotation which is carried as freight in a ship, plane, rail or truck and the activities undertaken by the appellants in terms of the contracts on behalf of M/s. MCL to move coal within mining area do not fall in the category of cargo handling service. Moreover, activities undertaken are principally the transportation of coal within mining area and hence, the gross amounts received for the same cannot be taxed under the category of cargo handling service. We have, therefore, no hesitation in our mind to hold that the definition on cargo handling service under the Finance Act, 1994, does not include the kind of activities undertaken by the appellants and hence the same are not chargeable to service tax. We also find that there was no suppression or mis-statement by the appellants regarding the nature of activities undertaken by the appellants and hence the imposition of penalty on them is not at all justified. Accordingly, we set aside the impugned order and allow both the appeals with consequential benefit to the appellants".
14. In the case of Gaytri Construction Co (supra), the Tribunal was examining certain activities, which, inter alia, involved shifting of coal from (8) ST/713/2010 & ST/228/2011 power plant to cement plant within the factory premises and also shifting of final product from the factory to appropriate storage place within the factory premises. Thereafter, relying on various case laws cited by both sides, it was, inter alia, held that shifting of goods within the factory premises will not come within the scope of CHS. Para 9 is cited below for ease of reference.
"9. Considered arguments on both sides, we find that it is now well settled by the decisions of the Courts and Tribunal discussed above that shifting of goods within the factory premises will not come within the scope of "Cargo Handling Services" as decided in the case of S.B. Construction (supra). There is no need for much discussion on the issue. In the case of handling of goods using conveyor system also decision of Hon'ble Punjab & Haryana High Court in the said decision has held that such activity will not fall within the definition of "Cargo Handling Service".
There is no information that such orders has been challenged by the Revenue or stayed by the Apex Court. The facts of the case at hand is different for that in Gajanand Agarwal where the whole payment was based on per metric tome or cargo loaded in railway wagons."
15. Similar view was also expressed by the Tribunal in the case of CCE, Rajkot Vs Abbas J Chavda [2013 (30) STR 387 (Tri-Ahmd)], relying on the judgment of Hon'ble High Court of Jharkhand in the case of CCE, Ranchi Vs Modi Construction Co [2011 (23) STR 6 (Jhar)].
16. In the case of Manoj Kumar (surpa), Hon'ble High Court of Allahabad, referring to the decision of Hon'ble High Court of Jharkhand in the case of Modi Construction Co (supra) and the decision of Hon'ble High Court of Rajasthan in the case of SB Construction Co Vs UOI [2006 (4) STR 545 (Raj)], inter alia, held that transportation of goods viz., sugar bags was within the factory and the appellants were engaged in loading and unloading, stacking and re-stacking and shifting from one godown to another godown but the sugar bags were not loaded or unloaded for movement outside the factory or on public road or any ship, aircraft or truck for onward movement towards destination.
17. Therefore, in all these cases, what has essentially been found is that if the goods are transported or handled within the factory premises or plant, it would not be covered under the ambit of CHS. We also find merit on the alternative argument that the nature of the goods, which were being handled was not that of cargo and it was merely goods and there is a distinction between the term 'cargo' and 'goods'. The term 'cargo' has not (9) ST/713/2010 & ST/228/2011 been defined under the Act but essentially, it means goods and merchandise taken on boat, vessel or aircraft and also the fact that the said service has to be provided by cargo handling agency. The perusal of the agreement does not support this view of the department that HSCL was a cargo handling agency and on contrary, they were essentially engaged in handling certain materials including transportation thereof within the premises of the plant itself using their own heavy equipments, manpower, transportation, etc. The only activity which can remotely be considered as handling of cargo is unloading of railway wagon and loading in railway wagon including transport to and from stockyard. However, if the entire contract and activity are seen then it would not be a dominant activity vis-à-vis other activities carried out within the plant premises. We also find force that if it is not cargo then it would merely be a good and the 'good' was brought under the purview of CHS only post 16.05.2008. We find that section 65(23), which defines CHS, a new definition was substituted, wherein, apart from the expression 'cargo', 'goods' was also included. The definition before and after is cited below:
Definition of CHS before 16.05.2008:
'Cargo Handling service' means loading, unloading, packing or unpacking of cargo and includes cargo handling services provided for freight in special containers or for non-containerized freight, services provided by a container freight terminal or any other freight terminal, for all modes of transport and cargo handling services incidental to freight, but does not include handling of export cargo or passenger baggage or mere transportation of goods.
Definition of CHS post 16.05.2008:
'Cargo Handling service' means loading, unloading, packing or unpacking of cargo and includes, -
a) Cargo handling services provided for freight in special containers or for non-containerized freight, services provided by a container freight terminal or any other freight terminal, for all modes of transport and cargo handling services incidental to freight; and
b) Service of packing together with transportation of cargo or goods, with or without one or more of other services like loading, unloading, unpacking but does not include, handling of export cargo or passenger baggage or mere transportation of goods.
18. Learned AR has mostly relied on certain judgments in support that these activities will fall within the ambit of CHS. In the case of Coal Carriers Vs CCCE & ST, Bhubhaneswar (supra), the Hon'ble High Court of Orissa, (10) ST/713/2010 & ST/228/2011 inter alia, examined the scope of CHS keeping in view its definition before 16.05.2008 as well as the nature of contract. The Hon'ble Court did not interfere with the order of the assessing officer holding certain activities as falling under the category of CHS, which was further upheld by the Tribunal. We find that the scope of work in the said matter was primarily restricted to loading and unloading of coal on the railway wagon for transportation out of mines, whereas, in the present case, the scope of work is much larger and different. Therefore, this case law is distinguished. In the case of Shreem Coal Vs CCE, Bhubhaneswar-II (supra), the Coordinate Bench at Mumbai examined the similar issue, however, it was held that the activity was amounting to packaging and therefore, will not fall under CHS and therefore, the facts are distinguished. In Calcutta Industrial Corporation Vs CST, Kolkata (supra), the Tribunal, inter alia, examined the scope of CHS keeping in view the definition as existed during the material time and held the activity falling under CHS but did not find it a case fit for invoking extended period. This is also not relevant as apparently the scope of CHS examined by the Tribunal was for the period post 16.05.2008, even when the demand was for the period prior to the said date and the facts are also distinguished. In the case of Sarvodaya Shramik Kalyan Samiti Vs CCE, Bhopal (supra), the facts are clearly distinguished and hence not relevant.
19. The dominant activity being performed within the plant cannot be said as handling of cargo, inasmuch as the goods were being merely transported from one point within the plant to another point inside the plant viz., stockyard and in the process, certain other incidental activities like cutting, bending, de-coiling, etc., were done for ease of transportation. Therefore, in view of the case laws, cited supra, by both sides, demand to the extent of the activities pointed out will not sustain under the category of CHS.
Management, Maintenance or Repair service:
20. The main argument taken by the HSCL is that the maintenance or repair service was made effective from 16.06.2005 and the major part of the demand cannot sustain, as the same were services provided prior to 16.06.2005. We have gone through the order of the adjudicating authority where, in all, 13 work orders were examined and we have also examined the scope of work mentioned at S.No.2, 3, 7 & 12 and find that prior to 16.06.2005, the scope of service covered maintenance or repair only, (11) ST/713/2010 & ST/228/2011 whereas, post 16.06.2005, even when there is no maintenance contract or agreement, the said activities were covered. We find that the findings of the adjudicating authority considering these contracts as contracts for, inter alia, repair and maintenance, after examining in detail the scope of work and also observing that they have been paying service tax in respect of some of the contracts under the category of maintenance or repair service, whereas, they have not paid any service tax on similar contracts entered prior to 2005-06. Apparently, the argument of the HSCL is that prior to 16.06.2005, unless there was a maintenance contract, it could not have been brought under the ambit of the said service and that the contracts were not in the nature of maintenance. However, we find that from the scope of contract itself, it was very much in the nature of maintenance and repair contract and also the nature of activities performed by them was akin to maintenance or repair. It was not necessary that they had to undertake both the activities of maintenance as well as repairs and if they had either maintained or repaired or both, they will still be covered within the scope of the service. Therefore, we do not find any infirmity in the order of the adjudicating authority to this extent.
Commercial or Industrial Construction service:
21. The adjudicating authority has examined the 3 contracts and held them liable to pay service tax under CICS. HSCL has primarily argued that insofar as the contract dt.01.05.2004 is concerned, it is their contention that it is in the nature of WCS and hence it cannot be leviable to service tax prior to 01.06.2007. Whereas, in respect of contracts dt.19.07.2004 and 05.08.2004, these were more in the nature of repair and maintenance work and hence, cannot be classified under CICS. The adjudicating authority has examined these contracts and his findings at para 7.7, are cited below, wherein he has made a categorical observation that no material portion was involved. Therefore, it could not have been WCS. Similarly, since no material was used by them, they would also not be entitled for abatement of 67%.
"7.7 The assesses are paying service tax on the amounts received towards the services rendered under the contracts - VSP/WC/STED/55165-7/0/2005-06/5426 dated 23.9.05 and VSP/WC/STED/56020-9/0/2006-07/8167 dated 31.7.06 under the category of maintenance or repair service from 10.06.2006 and from 28.03.2007 respectively. The assesses were also paying service tax in respect of contract PO No.6000092-OQ-12001 dated 10.8.06 for civil works at Rajahmundry LPG under Construction Services. In respect of (12) ST/713/2010 & ST/228/2011 Contract No. VSP/WC/STED/55165-7/0/2005-06/5426 dated 23.9.05, nature of work is structural repair works for building and technological structures including roof sheeting and side cladding works in various units of RMHP & CRMP area and in respect of Contract No. VSP/WC/STED/56020-9/0/2006-07/8167 dated 31.7.06 nature of work is structural repair works for building and technological structures including roof sheeting and side cladding works in various RMHP & CRMP area. As seen from the nature of works undertaken from the work orders mentioned above, the assesses are engaged in construction/repair of various steel structures, buildings and pipe lines primarily used by the Industry and appears to fall under "Commercial or Industrial Construction service". The contention of the assesses in his statement dated
17.10.2007 that the structural repair work falls under maintenance repair service appears to be incorrect as the repair work is carried out to the buildings and technological structures which are neither goods nor equipment but industrial structures/ buildings. Hence, the structural repair work for building and Technological structures including roof sheeting and side cladding works as seen from the bill of quantities appears to fall under the category of "Commercial or Industrial Construction service" as defined under section 65(25b) of the Finance Act, 1994."
22. Therefore, we do not find any infirmity in the findings of the adjudicating authority in this regard.
Manpower Recruitment or Supply Agency service:
23. The adjudicating authority has examined three contracts and the main argument of the HSCL is that MRSAS was brought under tax net w.e.f. 16.06.2005, whereas, in relation to these contracts, the work was done by supplying manpower prior to that date and bills were raised subsequently and hence demand under this head was not maintainable. We find that in view of the contract, the services were provided prior to introduction of this levy and in fact, there is no dispute that even the services were provided prior to this date and merely because bills were raised later on for this service and payments were received later on, demand cannot be made in respect of these three contracts under the category of MRSAS. Therefore, to that extent, order of the adjudicating authority is liable to be set aside.
24. Coming to the issue of limitation, we find that the adjudicating authority has taken into account, inter alia, various factors including their being aware of the responsibilities of discharging service tax under various categories and their having decided not to pay service tax on the ground that they were not getting the service tax reimbursed in the absence of any clause in the Letter of Intent. Thus, it was a well thought of and deliberate act. As regards various other submissions like having bonafide belief or their (13) ST/713/2010 & ST/228/2011 having interpretational issues regarding classification or their being a PSU, the adjudicating authority has not categorically come out with any specific rebuttal and has emphasized that while in respect of some contracts, they were discharging certain service tax, whereas, in relation to similarly placed contracts, they were not discharging service tax and they have not brought any of these issues to the notice of the department. On the other hand, we find that the appellants are mostly emphasizing on the judgments, wherein, it has been held that there cannot be malafide intent in the case of the unit being Government or PSU. However, in the facts of the case, we do not find any force in their contention that they were having bonafide belief that the activities being carried out within their plant were not falling under particular category or otherwise or for that matter, certain contracts were not considered as covered within the scope of repair and maintenance service or under MRSAS. We find that there were certain interpretational issues involved as regards proper classification of the activities as the same could have fallen under various categories including CHS, GTA service, Business Support service, etc. However, we find that they being a big organization would have analysed the relevant statutory provisions and taken a conscious decision. Learned AR has, in support that merely being a PSU cannot be a ground for non-invocation of extended period, relied on the judgment in the case of CCE & ST (LTU) Vs Oriental Insurance Co Ltd [2017 (50) STR 264 (Del)], wherein, the Hon'ble High Court of Delhi has examined the order of the Tribunal, wherein, it was held that there was no intention to suppress facts and more so on account of their being PSU and hence cannot be said to indulge in such practice. The Hon'ble Court, inter alia, observed that the opinion of the Tribunal cannot be considered as widely. The facts and circumstances have to be examined in each and every case in the light of declarations made. Similarly, in the case of Bharat Petroleum Corporation Ltd Vs CCE, Nashik [2009 (242) ELT 358 (Tri-Mum)], wherein, inter alia, the Tribunal held that in the light of presence of positive acts, their being a PSU, per se, cannot be a ground for not invoking extended period. Similarly, in the case of Chennai Port Trust Vs CST, Chennai [2017 (5) GSTL 394 (Tri- Chennai)], it was, inter alia, held that being a PSU cannot be a plea against invocation of extended period. In the case of CCCE & ST, LTU-Delhi Vs Gas Authority of India Ltd [2019 (366) ELT 941 (Tri-Del)], similar ground was, inter alia, considered and was held that merely because the assesse is PSU, (14) ST/713/2010 & ST/228/2011 it cannot be a ground for setting aside the SCN. Para 24 is cited below for ease of reference.
"24. Finally coming to the plea of show cause notices being barred by time; From the entire above discussion, it is clear that the product of the respondent has wrongly been classified by the respondent as Naphtha. It is also apparent fact that the Naphtha has much lesser Excise Duty as less as Rs. 15 per litre. In view thereof misdeclaration cannot be ruled out to be a strategy for tax evasion. We also opine that the act to the extent of even claiming exemption on the misdeclarated product is a positive act of misrepresentation of the facts with sole intention to evade duty. Resultantly the Department, in view of the proviso to Section 73 of Central Excise Act, is held to be very much entitled to invoke the extended period of limitation. Not only this, the penalties are also held to have been rightly proposed in the show cause notices but wrongly done away by the Adjudicating Authority below. The case law as relied upon by the respondent to impress that it being PSU no mala fide can be attributed is not applicable to M/s. GAIL where Government of India is not the only stake holder. We draw our support rather, from Bharat Petroleum Corporation Limited v. Commissioner - 2015 (326) E.L.T. A33 (S.C.) where it was held that mandatory penalties can be imposed on PSU there are precedent of involving penalty on PSUs. Hon'ble High Court Madras in another case CCE, Chennai v. Peter & Miller Packers - 2015 (319) E.L.T. 631 (Mad.), has also held that ignorance of law is not an excuse even to PSU, if there is element of apparent on its pact. In the present case the misdeclaration on pact of respondent has already been established. Major duty difference on the misdeclared product is also held to be the strategy of tax evasion. Merely that assessee is PSU is not sufficient to set aside the SCN as being barred by time. To this aspect also Adjudicating Authority below is held to be incorrect."
25. Insofar as the reliance placed in the case of CCE, Delhi Vs Ishaan Research Lab P Ltd [2008 (230) ELT 7 (SC)] in support of non-invocation of extended period, we find that the Hon'ble Supreme Court upheld the view of the Tribunal holding that there was no case for invoking extended period. However, the facts of the case are clearly distinguished as in the present case, there is no dispute, as such, regarding classification of activities as no other evidence has been brought on record by the HSCL that their activities were classifiable under different contrasting classification during the material time and that there were certain disputes covering the similar activity holding the same classifiable under different headings. Thus, the ratio of this case is not applicable.
26. Therefore, in view of the citations from both sides, we find that the plea that they are a PSU and hence there could not have been any deliberate or malafide intent to evade tax cannot be the sole ground for deciding whether the extended period can be invoked or otherwise. We find that if there are other positive acts on the part of HSCL, which amounts to (15) ST/713/2010 & ST/228/2011 suppression or withholding of information deliberately or consciously, then even though they are PSU, the extended period is still invokable. We find that apart from their being PSU, they have contested the invocation of extended period on the grounds of this being a matter of interpretation of their having a bonafide belief. Insofar as the issue of interpretation is concerned, we find that there could have been some bonafide interpretational issue in the facts of the case with regard to the nature of cargo or mere transportation of goods within the plant, but they could have sought clarification from the department, especially, when they were otherwise registered under service tax and their being a big organization. However, they have not discharged service tax in a casual manner and only when the department was able to get full details of the contract and also got elaborate explanation thereto under investigation where certain statements were also recorded, the full facts came to the knowledge of the department to decide the true nature of the activities being performed by them and thereafter, leading to the conclusion that certain activities were classifiable under certain taxable categories in respect of which they have not discharged any service tax liability. Thus, in the facts and circumstances of the case, the plea of non-invocation of extended period lacks merit and we do not agree with the submissions made by HSCL and to that extent, we concur with the views of the adjudicating authority.
27. To sum up,
a) In respect of demand under CHS, the demand is set aside on merit.
b) In respect of demand under MMRS, the entire demand is sustained on merit as well as limitation.
c) In respect of demand under CICS, the entire demand is sustained on merit as well as limitation.
d) In respect of demand under MRSAS, the demand is set aside on merit.
28. Appeal allowed partly.
In Appeal No.ST/228/2011 - Visakha:
29. Insofar as this appeal is concerned, the brief facts are that Visakha has entered into agreement with HSCL vide contract dt.25.08.1999. The (16) ST/713/2010 & ST/228/2011 scope of work of the said contract is exactly the same as was awarded by RINL to HSCL. In other words, the entire contract was sub-contracted to Visakha by HSCL.
30. Learned CA for Visakha has, inter alia, submitted that in terms of contract between them and HSCL, they were obliged to deploy machinery and also manpower to carry out handling operations in Visakhapatnam Steel Plant area and HSCL is the principal contractor and they are sub-contractor and there is, inter alia, provision in the contract that in the event of any activity attracting service tax, the same would be borne and remitted by the principal contractor.
31. Learned AR, on the other hand, has reiterated the findings of the adjudicating authority and has submitted that it is settled position that when taxable services are provided by service provider as sub-contractor, he is liable to discharge service tax irrespective of the fact that the service tax has been discharged by the principal contractor on the same activity. In this regard, he has relied on the case of CST, New Delhi Vs Melange Developers Private Limited [2020 (33) GSTL 116 (Tri-LB)].
32. Heard both sides and perused the records.
33. We find that insofar as leviability of tax on the said activity is concerned, a detailed findings has already been given while examining the scope and leviability of service tax in relation to same set of activities of the principal contractor viz., HSCL, supra. Therefore, the same findings will also be applicable here and demand will not sustain. Insofar as the plea that their being a sub-contractor, we do not find any merit in view of the cited case laws by the Revenue. Thus, they will still be liable to pay service tax on the said service to the extent applicable. Insofar as the ground of limitation is concerned, we find that SCN has been issued by invoking proviso to section 73(1). However, we find that the only ground taken for invoking extended period in the SCN was that they had not got themselves registered under CHS and also did not furnish information with regard to receipt of amount during the relevant period. Further, we find that they are other two mitigating factors in this case, which one has to take into account vis-à-vis the grounds taken by the department for invoking extended period. Firstly, that this could be bonafide belief that they were not liable to pay service tax (17) ST/713/2010 & ST/228/2011 when they had been categorically told by their principal contractor that at present, no service tax was payable and in case there is any levy, it will be borne by the principal contractor i.e., HSCL. Moreover, prior to Board's Circular in 2007, there was ambiguity about leviability of service tax simultaneously on both contractor and sub-contractor. Thus, there is enough ground to have bonafide belief that they were not liable to pay service tax and hence in view of the same, invocation of extended period in respect of Visakha is also not tenable in the facts of the case. Thus, demand is liable to be set aside both on merits and limitation.
34. Appeal allowed.
(Pronounced in the Open Court on 21.11.2025)
(A.K. JYOTISHI)
MEMBER (TECHNICAL)
(ANGAD PRASAD)
Veda MEMBER (JUDICIAL)