Custom, Excise & Service Tax Tribunal
M/S Narayan Builders vs Cce, Jaipur on 17 April, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
West Block No. 2, R.K. Puram, New Delhi 110 066.
Date of Hearing : 17.4.2013
Service Tax Appeal No. 699 of 2007
[Arising out of Order-in-Appeal No.83(GRM) ST/JPR-I/2007 dated 30.3.2007 passed by the Commissioner, Customs & Central Excise, Jaipur]
For Approval & Signature :
Honble Mr. Justice G. Raghuram, President
Honble Mr. Sahab Singh, Member (Technical)
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2.
Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3.
Whether their Whether their Lordships wish to see the fair copy of the order?
4.
Whether order is to be circulated to the Department Authorities?
M/s Narayan Builders Appellant
Vs.
CCE, Jaipur Respondent
Appearance:
Dr. G.K. Sarkar, Advocate - for the appellant
Shri Amresh Jain, D.R - for the respondent
Coram : Honble Mr. Justice G. Raghuram, President
Honble Mr. Sahab Singh, Member (Technical)
F. Order No.56169/2013 dated 17.4.2013
Per Justice G. Raghuram :
Heard Dr.G.K. Sarkar, ld. Counsel for the appellant and the ld. D.R. Shri Amresh Jain for the respondent/Revenue. The present appeal is preferred against the appellate order dated 30.3.2007 confirming the adjudication order dated 1.6.2006 whereby the appellant/assesee was assessed to service tax liability of Rs.7,55,357/-, interest and penalties thereon as specified in the adjudication order.
2. The appellant/assessee entered into an agreement with Kota Thermal Power Station, Kota Rajasthan, inter alia for execution of works for smooth operation of coal handling system including clearing under coal handling operation circle for meeting coal consumption requirements of KTPS units stage (I) to (IV) by unloading of coal wagons at WT No. 1 to 5 and others specified operations in relation thereto.
3. Revenue issued a Show Cause Notice dated 10.11.2005 alleging, on the basis of information gathered from KTPS/Kota that the assessee had provided coal handling service to KTPS involving service tax liability of Rs.7,55,357/- in respect of receipts from KTPS, during 22.10.2003 to 14.9.2004. The SCN further asserted that a clarification was issued in the Regional Advisory Committee meeting held on 6.9.2004, that the assessee and others similarly situated who were providing loading, unloading, packing, unpacking services are liable to service tax with effect from 16.8.2002, if such services are provided by cargo handling agency; an assessee failed to remit service tax in the specified amount in respect of the period 8.8.2003 to 7.8.2004 had failed to declare the facts to the department; and had wilfully suppressed the value of the taxable service with intent to evade service tax and thereby contravened specified provisions of the Finance Act, 1994.
4. The assessee responded to the Show Cause Notice denying its liability and predicated its immunity to service tax on Boards Circular No. B/1/2002-TRU dated 1.8.2002 wherein para 3 purported to clarify that the services which are liable to tax under Section 65(23) of the Act are those provided by cargo handling agencies who undertake the activity of packing, unpacking, loading and unloading of goods meant to be transported by any means of transportation viz. truck/rail/ship or aircraft.
5. The adjudication order was passed after a due process of consideration of the assessees response and the liability to tax as per the Show Cause Notice was confirmed. The assessee unsuccessfully preferred an appeal which was dismissed by Commissioner (Appeals) on 30.3.2007. The assessee is thus before this Tribunal seeking invalidation of the appellate determination which confirmed the primary determination by the adjudicating authority.
6. The ld. Counsel for the appellant contends that there are several decisions by this Tribunal as well as by the High Court of Rajasthan and Jharkhand which have taken the view that mere handling of coal and movement of the said goods from railway wagon to the site of Thermal Power Station with the aid of the wagon tipping system to be fed in the boiler bunkers through motor vehicles or any other means of transportation involved in such handling, would not constitute cargo handling service within the meaning of Section 65(23) of the Act. Ld. Counsel has referred the decisions of this Tribunal in J & J Enterprises Vs. CCE 2006 (3) STR 655 (Tri.-Del.), Southern Electronics (Bang.) P. Ltd. Vs. CCE 2007 (212) ELT 276 (Tri.-Bang.), Singh Brothers Vs. CCE 2009 (14) STR 552 (Tri.-Del), CCE Vs. Modi Construction Company 2011 (23) STR 6 (Jhar.), Gaytri Construction Co. Vs. CCE 2012 (25) STR 259 (Tri.-Del.) and the judgement of High Court of Rajasthan in S.B. Construction Company Vs. Union of India 2006 (4) STR 545 (Raj.).
7. Per contra, the ld. DR relies on the recent judgement of the Orissa High Court in Coal Carriers Vs. CCE - 2011 (24) STR 395 (Ori.).
8. While the decisions cited by the ld. Counsel for the assessee including the decision of the High Court of Rajasthan within whose territorial jurisdiction the appellant/assessee falls are in favour of the assessee and clearly interprets the relevant provision [i.e Section 65(23) which defines cargo handling service], to mean handling of Cargo (coal) including unloading from wagons and loading through the mechanical process of wagon tipplers for loading on a conveyor belt of a Thermal Power plant for feeding such coal into its boiler unit does not constitute cargo handling service, the decision of the Orissa High Court in Coal Carriers is clearly to the contrary.
9. In Coal Carriers, the Orissa High Court clearly ruled that cargo means the load or freight of a vessel, train, truck, aeroplane or other carrier (according to Blacks Law Dictionary); that goods which are meant for transportation from one place to another by any mode of transport is known as cargo; that meaning of expression loading means the act of putting a load on a car, vessel etc.; that unloading means disburdening or removing from; that cargo handling service is an adjunct service to the actual transportation of goods; and consequently pre-transportation activities like packing/loading and post-transportation activities like unloading/unpacking have been brought within the service tax net, a cargo handling service.
10. Relying on the judgement of Orissa High Court in Coal Carriers, Revenue contends that assessees activities clearly fall within cargo handling service and thus exigible to service tax; that neither the adjudication order nor the appellate order confirming the same suffer from any illegality warranting appellate intervention.
11. In SB Construction Company, the facts (before the Rajasthan High Court) were that the appellant therein was awarded a contract of unloading of coal through WT system, stacking/reclaiming of coal to S/R system and feeding of coal to boiler bunkers through the conveyor system. This contract with Rajasthan Rajya Vidyut Utpadan Nigam was from 29.3.2004 to 25.7.2006. There were identical contracts for subsequent periods as well. In this factual context, the High Court ruled that since coal is handled/moved from railway wagons to the site of Thermal Power Station with the aid of the wagon tipping system, to be fed in boiler bunkers through a conveyor system; handling of the coal was through mechanical devices and no motor vehicle was involved in the said handling, it was not a case of Cargo Handling Service The Court further held that the Circular dated 1.8.2002 (earlier referred to in this judgement) also supports the assessees claim to immunity to service tax under the category of cargo handling agency service. The Rajasthan High Court proceeded to hold that in the case before it the service provided by the appellant under the contract is a distinct activity of transporting coal from wagons to the site of Thermal Power Station by conveyor belt and not by means of any transportation and the service rendered is not cargo handling service , liable to service tax.
12. The cause of action of the assessee has arisen within the jurisdiction of Rajasthan High Court and the assessee was assessed to service tax by the jurisdictional Commissioners and the appellate Commissioner within the territorial jurisdiction of the Rajasthan High Court.
13. The question before us is whether in the facts and circumstances of this appea, the decision of the Rajasthan High Court in SB Construction Company must govern interpretation of Section 65(23) or the contrary ruling of the Orissa High Court in Coal Carriers.
14. This Bench which is hearing the present appeal, located in New Delhi is neither within the territorial jurisdiction of the Orissa High Court nor the Rajasthan High Court. There is no direct decision delineating the interpretation of Section 65(23) of the Act by the Delhi High Court, that is brought to our notice.
15. A full Bench of this Tribunal in Madura Coats Vs. CCE 1996 (82) ELT 512 clarified that where a conflict of decisions among High Courts does not relate to interpretation of statutory provisions or a notification (and not vires thereof) the decision of the jurisdictional High Court which has jurisdiction in respect of the authority which adjudicated the matter initially and of the assessee and has taken a particular view of interpretation or proposition of law, must be followed in cases falling within that jurisdiction. Madura Coats was reiterated by a Larger Bench of this Tribunal (5 Honble Members) in Collector of Central Excise Vs. Kashmir Conductors - 1997 (96) ELT 257. The larger bench referred to the Madura Coats decision and reiterated the principle that pronouncements as to the interpretation of a statutory provision or notification, by the High Court having jurisdiction inter alia over the assessee would be binding.
16. We are bound by the decision of the full Bench in Madura Coats and the Larger Bench in Kashmir Conductors and respectfully follow the same. Since the Rajathan High Court in S.B. Construction has interpreted Section 65(23) of the Act, in favour of the assessee the assessee must succeed and the appellate order impugned herein dated 30.3.2007 confirming the adjudication order dated 1.6.2007 must suffer invalidation.
17. Ld. Counsel for the assesee would also contend that initiation of proceedings leading to the order of adjudication followed by the appellate order is unsustainable for unjustified invocation of the extended period of limitation under the Proviso to Section 73(1) of the Act. Ld. Counsel would contend that (a) the assessee had bonafide believed that it was immunised to the charge of service tax and had based that this assumption on the Boards circular dated 1.8.2002 which interpretation has found resonance in the judgement of Rajasthan High Court in SB Construction. Reliance is placed for the contention regarding unauthorized invoocation of the extended period of limitation on the judgement of Supreme Court in Uniworth Textiles Ltd. Vs. CCE 2013 (288) ELT 161 (SC). The Supreme Court analysed the scope of Section 28 of the Customs Act, 1962 and having considered several earlier judgements on the appropriateness of invoking the extended period of limitation in the said provision of Customs Act, concluded that the expression willful which precedes the phrase mis-statement or suppression of facts clearly indicates that there must be an intention on the part of the assessee to evade duty; that mere failure to declare does not amount to wilful suppression of fact nor mere contravention of any provision would be sufficient to legitimise invocation of the extended period of limitation.
18. We are satisfied in the facts and circumstances of this case that the assessee was persuaded by the ambiguity of Boards circular dated 1.8.2002 to assume that it was immune to the liability to service tax, since its contractual activity did not involve onward transportation of the coal unloaded from wagons within the premises of the Kota Thermal Power Plant. In the facts and circumstances of the case, we do not consider it appropriate or necessary to pursue an analysis of whether the petitioner was at all involved in the activity of unloading coal from the rail/wagons as part its is contractual obligation. Ld. Counsel for the assessee on this aspect, contends that coal was unloaded from wagon by tippers provided and manned by KTPS personnel and that the assessee had no participation in such unloading nor was associated with operating the wagon tipper. Ld. DR to the contrary contends that the relevant provision of the contract clearly indicate contract between unloading of wagons is part of the contractual obligation.
19. Ld. DR also contends that apart from unloading the coal through wagon tippers the residual coal in the wagons is required to be cleared by the assessee and this activity at any rate involves unloading the coal from wagons, bringing it within cargo handling service, a service liable to tax under Section 65(23).
20. On the analysis above the appeal must succeed and is accordingly allowed. The adjudication order dated 1.6.2006, confirmed by the appellate order dated 30.3.2007 is quashed however, without costs.
(Justice G. Raghuram) President (Sahab Singh) Member (Technical) RM 1