Custom, Excise & Service Tax Tribunal
Narendra Civil Line Project & ... vs Commissioner, Central Excise And ... on 27 July, 2022
Author: Dilip Gupta
Bench: Dilip Gupta
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH-COURT NO.I
SERVICE TAX APPEAL NO. 52452 OF 2016
(Arising out of Order-in-Appeal No. BHO-EXCUS-002-APP-288-15-16 dated 06.01.2016
passed by the Commissioner (Appeals), Customs Excise & Service Tax, Raipur)
M/s. Narendra Civil Line Project & .... Appellant
Contractor (P) Ltd.
Badami Sadan, Singrauli Colliery,
District Singrauli (M.P.)
Versus
Commissioner of Customs Excise & .... Respondent
Service Tax, Jabalpur Revenue Building, Napier Town, Jabalpur (M.P.) APPEARANCE:
None for the Appellant Shri Harshvardhan, Authorized Representative for the Department CORAM:
HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT HON'BLE MR. P V SUBBA RAO, MEMBER (TECHNICAL) Date of Hearing/Decision: 27.07.2022 FINAL ORDER NO. 50686/2022 JUSTICE DILIP GUPTA This appeal is directed against the order dated January 06, 2016 passed by the Commissioner (Appeals), by which the order dated July 14, 2014 passed by the Joint Commissioner dropping the demand made in the show cause notice has been set aside by holding that the services provided by the appellant would be liable to service tax under "cargo handling service".
2. The appellant claims to be providing "transport of goods by road" service specified in section 65 (50b) of the Finance Act, 2 1994 1. The Department believed that the services provided by the appellant would be covered "cargo handling service" as defined in section 65(23) of the Finance Act. Accordingly, a show cause notice dated October 18, 2012 was issued to the appellant. It mentions that according to the work contract/ agreement, the appellant was awarded the following works:
"Hiring of drilling machine for drilling of 100mm dia blast holes in coal, Backhoe and tippers for loading and transportation of coal from Ghorawari 16/17, O.C. phase II, face to stock yard within 1.50 kms., Kanhan Area."
3. The show cause notice further give reasons as to why the activity carried out by the appellant would appear to be covered under the definition of "cargo handling service" and the said paragraph is reproduced below:
"As per the above work awarded to the Notice, it appears that the Notice has undertaken following activities- "Loading of coal into the tipper by pay loader and, then transporting and unloading the same at stock yard of M/s. WCL, Kanhan Area. The unloading of coal is done through mechanical devices fitted in the tippers/dumpers. All the necessary ingredients i.e. loading transportation and unloading of cargo are involved in the instant case as such these activities appear to be squarely covered under the ambit of definition of "Cargo handling Service"."
4. The appellant filed a reply dated February 08, 2013 to the aforesaid show cause notice. The Adjudicating Authority, by a detailed order dated July 14, 2014, dropped the proceedings initiated by show cause notice dated October 18, 2012. It held that the appellant had provided "goods transport agency service"
and not "cargo handling service" and the relevant paragraphs are reproduced below:
1. the Finance Act 3 "22. As per the clarifications issued by the CBEC vide letter D.O.F. No. 334/1/2008-TRU dated. 29.02.2008, in the case of a transaction containing a major and ancillary elements, classification is to be determined based on the essential features or the dominant element of the transaction and a supply that comprises a single supply from an economic point of view should not be artificially split. The CBEC clarified that a composite service, even if it consists of more than one service, should be treated as a single service based on the main or principal service and accordingly classified. By taking into account both the form and substance of the transaction in the relevant work orders and terms & conditions, I am of the view that the given transaction under the work order involves transportation of coal as the predominant activity which is the principal/major supply of service. The services of loading by pay loader/unloading is incidental/ancillary to the composite nature of service under the work orders in question, which are not provided as independent activities but are the means for successful provision of the principal service, namely, the transportation of coal from one place to another. Transportation of coal is the essential character/features of the service (transaction) in the work orders awarded by M/s WCL to the assessee.
Accordingly, in terms of the provisions of Section 65A(2b) of the Finance Act, 1994 and clarifications issued by the CBC vide circulars discussed above, I observe that the services rendered by the assessee to M/S WCL under the work orders in question for loading/unloading & transportation of coal will principally liable to be classified under "Goods Transport Agency service" instead of "Cargo Handling service".
Xxxx xxxx xxxx
25. It is on the record that the assessee is registered to provide taxable service under the category of "transport of goods by road". Once it is settled that the services rendered by the assessee are that of Transport of goods, the question of suppression of facts and contravention of various provisions of the Act, as alleged in the notice, does not arise at all. Therefore, in the present case, no penalty is imposable on the assessee as element of suppression is absent."
5. The Commissioner (Appeals), however, set aside the order passed by the Adjudicating Authority and held that the services provided by the appellant would fall under "cargo handling service" leviable to service tax.
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6. Despite service of the notice, learned counsel for the appellant has not appeared. Learned authorized representative appearing for the department made submissions and supported the impugned order.
7. The issue that arises for consideration in this appeal is as to whether the activity of loading, transportation and unloading of coal from one point to another point within the mining area would can be classified under "cargo handling service".
8. This issue has been decided by a Division Bench of the Tribunal in Singh Transporters vs. Commissioner of Central Excise, Raipur 2 and it has been held that the activity would not fall within the definition of "cargo handling service". The relevant portion of the order is reproduced below:
"19. When we examine the activity undertaken by the appellant as reflected in the agreement, in the light o the above decision of the Tribunal, we note that prime work for which the contract was awarded to the appellant for crushing screening and sieving of the dolomite in the mining area. The movement of the end product from site of one activity to the site of second activity for further work upon the same is within the mining area. As such, it can be safely concluded that the said activity, being within mining area cannot be held to be covered by the definition of cargo handing service."
9. The Civil Appeal filed by the Department before the Supreme Court to assail the order of the Tribunal was dismissed by the Supreme Court on April 27, 2018 (Commissioner v. Singh Transporters) 3, and the order is reproduced:
"1. Delay condoned.
2. Heard the learned counsel for the appellant and perused the relevant material.
2. 2012 (27) S.T.R. 488 (Tri.-Del.)
3. 2018 (13) G.S.T.L. J40 (S.C.) 5
3. We find no merit in this appeal. Admission is refused and the Civil Appeal is, accordingly, dismissed."
10. In view of the aforesaid decision of the Division Bench of the Tribunal against which the Civil Appeal filed by the Department before the Supreme Court was dismissed, the impugned order dated January 06, 2016 passed by the Commissioner (Appeals) cannot be sustained and is set aside. The appeal is, accordingly, allowed.
(JUSTICE DILIP GUPTA) PRESIDENT (P V SUBBA RAO) MEMBER (TECHNICAL) Archana