Custom, Excise & Service Tax Tribunal
Rasleela Enterprises Pvt Ltd vs Jaipur I.. on 18 January, 2024
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. - IV
Service Tax Appeal No. 52224 of 2018 [DB]
[Arising out of Order-in-Original No. JAI-EXCUS-000-COM-01-18-19 dated
04.04.2018 passed by the Commissioner of CGST & Central Excise
Commissionerate, Jaipur]
M/s. Rashleela Enterprises Pvt. Ltd. ...Appellant
C-5, Krishna Balaram,
Opp. St. Anslem School,
Malviya Nagar, Jaipur (Rajasthan)
VERSUS
Commissioner of Central Excise
& C.G.ST, Jaipur-I ...Respondent
NCR Building, Statue Circle, C-Scheme, Jaipur, Rajasthan - 302005 APPEARANCE:
Ms. Purvi Asati, Advocate for the Appellant Shri Harshvardhan, Authorized Representative for the Respondent CORAM:
HON'BLE DR. RACHNA GUPTA, MEMBER (JUDICIAL) HON'BLE MR. P.V. SUBBA RAO, MEMBER (TECHNICAL) DATE OF HEARING: 22.09.2023 DATE OF DECISION: 18.01.2024 FINAL ORDER No. 50104/2024 DR. RACHNA GUPTA The appellants are registered for providing Mining Services, Goods Transport Agency Services, Works Contract Service and Cargo Handling Services. From the scrutiny of records provided by the appellants in response to the letter of Superintendent Service Tax Range-IV, Division-I, Jaipur dated 14.07.2016 and 16.12.2016, the department observed that the appellants are providing mining services in respect of mines pertaining to M/s. Jai Prakash Associates Ltd., Dalla, M/s. Jai Prakash Associates Ltd. Tanda and 2 Service Tax Appeal No. 52224 of 2018 [DB] M/s. Jai Prakash Associates Ltd. Sidhi. However, they were paying service tax only on some part of the taxable value of mining services and have not paid the service tax on the total amount received by them including the transportation charges. Department formed an opinion that the transportation charges are to be covered under mining services.
1.1 On scrutiny of details of invoices raised by the appellants for a period from January 2015 to March 2016, to contract parties/service receivers and their respective ledger accounts, department noticed that the appellant had received an amount of Rs.19,49,69,813/- against the transportation charges on which the service tax amounting to Rs.2,63,57,197/- was payable. However, as apparent from the examination of ST-3 returns and copies of GAR-7 challan for the respective period, the appellant was found to have deposited service tax only amounting to Rs.44,01,223/- under "Transport of goods by road agency service". Thus, service tax amounting to Rs.2,19,55,974/- was observed to have been short paid by the appellant. Resultantly, the Show Cause Notice No. 1813 dated 14.12.2017 was served upon the appellant proposing the recovery of the aforesaid short paid amount along with the proportionate interest and the appropriate penalties. The said proposal has been confirmed vide the Order-in-Original No. 01-18- 19 dated 04.04.2018. Being aggrieved the appellant is before this Tribunal.
2. We have heard Ms. Purvi Asati, learned counsel for the appellant and Shri Harshvardhan, learned Authorized Representative for the department.
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Service Tax Appeal No. 52224 of 2018 [DB]
3. Learned counsel for the appellant has mentioned that the appellant is engaged in the provision of Mining Services, Service of transportation of the mined goods from mining sites to other places and transportation of other goods to various principals/mine owners. In this regard, the appellant has entered into contracts with various principals for the provision of the requisite services rendered by appellant. In each of these contracts executed between the appellant and the principals, separate rates have been mentioned for the services of mining and for the services of transportation.
3.1 It is further submitted that appellant thus has charged separate amount for the mining services rendered and the amount for rendering services of transportation of mined material to the respective plants/crushers/designated places was charged separately. It is also impressed upon that the mining activity provided by the appellant ceases as soon as the mineral gets excavated. Thereafter the mined goods need to be transported from the excavation site to the designated places based on the transit slips mentioning specific vehicle number, weight etc. to be issued by the appellants. Thus, the transportation activity was in the nature of rendering service of 'Goods Transport Agency' and service tax on the same was liable to be discharged by the service recipients i.e. the principals under Reverse Charge Mechanism which has duly been discharged by them. The acknowledgment for the same by the principal is mentioned to have been annexed on record. Learned counsel has relied upon the following decisions: 4
Service Tax Appeal No. 52224 of 2018 [DB]
(i) Mirza Hasam Vs. Commissioner (Appeals) Customs, Central Excise and Service Tax, Raipur, reported as 2022 (6) TMI 43-CESTAT NEW DELHI
(ii) Coal Man. Vs. CCE & ST, Raipur, reported as 2018 (8) TMI 1105-CESTAT NEW DELHI
(iii) Arjuna Carriers Pvt. Ltd. Vs. CST, Raipur, reported as 2014 (11) TMI 1048 - CESTAT NEW DELHI 3.2 Learned counsel also brought to the notice that earlier also two show cause notices dated 13.10.2014 and 17.04.2015 were served upon the appellants for the period from April 2009 to June 2013 and July 2013 to December 2014 respectively with the same allegations as are contained in the present show cause notice.
Though the departmental adjudicating authority had confirmed the demand of both the said show cause notices. However, the appeal filed before this Tribunal has been decided in favour of the assessee-appellant, setting aside the confirmation of the said demand. Finally it is submitted that in view of the earlier decisions in favour of appellant and the regular filing of returns by the appellants, also the regular audit of their records by the department, the present is not the case of misrepresentation or suppression of any fact as is alleged in the show cause notice. The extended period is therefore has wrongly been invoked. Learned counsel has relied upon the decision of Hon'ble Supreme Court in the case of CCE Vs. Chemphar Drugs and Liniments reported as 1989 (40) ELT 276 (SC). The imposition of penalty is also prayed to be set aside. While relying on the decisions in the case of Commissioner of Customs & Central Excise, Vapi Vs. M/s. 5
Service Tax Appeal No. 52224 of 2018 [DB] Shree Soap & Chemical Ind reported as 2008-TIOL-950- CESTAT-AHM and the decision of Steel Authority of India Ltd. Vs. Commissioner of Customs, Calcutta reported as 2001 (136) ELT 316 (Tri.-Kolkata), the order under challenge is prayed to be set aside and appeal is prayed to be allowed.
4. While rebutting these submissions it is mentioned by learned Authorized Representative that from the perusal of agreements/contracts/work orders as have been executed between appellants and their principals, the activity is detailed as the one starting from mining of minerals to the delivery thereof to the designated site of the service receiver. The billing pattern also reflect that the activity of transportation is linked with the quantum of mineral actually extracted by the service provider. Hence the entire service rendered by the appellant is rightly been held as the services predominantly relating to the mining activity and as such the entire tax liability arises for rendering one particular kind of service for which the appellant only is liable to discharge the tax liability on the total amount of consideration received for rendering the said service. Impressing upon the correctness of findings in Para 4 of the order under challenge, the order is prayed to be upheld and the appeal is prayed to be dismissed. Learned Departmental Representative has relied upon the following decisions:
(i) M Ramakrishna Reddy Vs. Commr. of C. Ex. & Cus.
Tirupathi, reported as 2008 (10) TMI 115 - CESTAT, Bangalore 6 Service Tax Appeal No. 52224 of 2018 [DB]
(ii) Commissioner of C.Ex., Hyderabad Vs. Vijay Leasing Company, reported as 2010 (12) TMI 782 - CESTAT, Bangalore
(iii) M/s. Associated Soapstone Distributing Co. Pvt. Ltd. Vs. CCE., Jaipur - II, reported as 2013 (11) TMI 1452 - CESTAT NEW DELHI
(iv) M/s. Sadbhav Engineering Ltd. Vs. Commissioner of Service Tax, Ahmedabad reported as 2016 (2) TMI 873 - CESTAT AHMEDABAD
(v) Aravali Construction Company Pvt. Ltd. Vs. CCE, Jaipur
- II, reported as 2016 (8) TMI 675 - CESTAT NEW DELHI
5. Having heard the rival contentions of the parties, perusing the entire records including the contracts and the invoices/transit slips. We observe as follows:
5.1 The appellants had agreed for providing the services as that of drilling, blasting, raising and loading for mineral ore at specific cost. The appellants have also agreed to transport the excavated mineral/material as well as the reject/surplus from the mine to the designated site. In case of M/s. Jai Prakash Associates Ltd. Tanda, the appellants have agreed to transport the excavated limestone along with the over burden/reject from railway siding to the grinding unit. We appreciate that in all the contracts executed by the appellants with the respective principal, the transportation cost has been charged separately. In light of these observations it is to be seen as to whether the whole activity of the appellant or the services rendered by the appellant are mining service only or are 7 Service Tax Appeal No. 52224 of 2018 [DB] two different services. For the purpose, we take notice of the fact that w.e.f. 01.07.2012 the term "service" has been defined under Section 65B (44) of the Finance Act in following way:
Section 66B (44) "service" means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include-
(a) an activity which constitutes merely,-
(i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner, or
(ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29A) of article 366 of the Constitution, or
(iii) a transaction in money or actionable claim;
(b) a provision of service by an employee to the employer in the course of or in relation to his employment;
(c) fees taken in any Court or tribunal established under any law for the time being in force.
Explanation 1. - For the removal of doubts, it is hereby declared that nothing contained in this clause shall apply to, - (A) the functions performed by the Members of Parliament, Members of State Legislative, Members of Panchayats, Members of Municipalities and Members of other local authorities who receive any consideration in performing the functions of that office as such member, or (B) the duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity, or (C) the duties performed by any person as a Chairperson or a Member or a Director in a body established by the Central Government or State Governments or local authority and who is not deemed as an employee before the commencement of this section.
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Service Tax Appeal No. 52224 of 2018 [DB] Explanation 2. For the purposes of this clause, the expression "transaction in money or actionable claim" shall not include - (1) any activity relating to use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged;
(ii) any activity carried out, for a consideration, in relation to, or for facilitation of, a transaction in money or actionable claim, including the activity carried out -
(a) by a lottery distributor or selling agent on behalf of the State Government, in relation to promotion, marketing, organising, selling of lottery or facilitating in organising lottery of any kind, in any other manner, in accordance with the provisions of the Lotteries (Regulation) Act, 1998;. (Finance Act 2016)
(b) by a foreman of chit fund for conducting or organising a chit in any manner;
Explanation 3. For the purposes of this Chapter,-
(a) an unincorporated association or a body of persons, as the case may be, and a member thereof shall be treated as distinct persons;
(b) an establishment of a person in the taxable territory and any of his other establishment in a non-taxable territory shall be treated as establishments of distinct persons. Explanation 4 - A person carrying on a business through a branch or agency or representational office in any territory shall be treated as having an establishment in that territory; 4.4.4 As per section 668 (51) of the Finance Act, 1994 "taxable service" means any service on which service tax is leviable under section 66B. I find that the above statutory provision clearly show that the activity performed by the Noticee against which they received the consideration falls under the category of service. Further, the Noticee has never questioned taxability of the consideration received; therefore, finding the fact admitted, no further deliberation on the issue of taxability is required. 9
Service Tax Appeal No. 52224 of 2018 [DB] We also take note of the Section 66F of the Finance Act, 1994. It reads as follows:
Section 66F of the Finance Act, 1994 provides the principles of interpretation of specified descriptions of services or bundled services with effect from 01.07.2012 as follows:
(1) Unless otherwise specified, reference to a service (herein referred to as main service) shall not include reference to a service which is used for providing main service. (2) Where a service is capable of differential treatment for any purpose based on its description, the most specific description shall be preferred over a more general description. (3) Subject to the provisions of sub-section (2), the taxability of a bundled service shall be determined in the following manner, namely:
(a) if various elements of such service are naturally bundled in the ordinary course of business, it shall be treated as provision of the single service which gives such bundle its essential character;
(b) if various elements of such service are not naturally bundled in the ordinary course of business, it shall be treated as provision of the single service which results in highest liability of service tax.
Explanation. For the purposes of sub-section (3), the expression "bundled service" means a bundle of provision of various services wherein an element of provision of one service is combined with an element or elements of provision of any other service or services."
5.2 Despite these changes in the Finance Act, the fact that transportation is a specifically defined activity is still there in the statute. Also as already observed above, the contracts are not composite in nature and the services provided by the appellants are not composite in nature. There are separate arrangement/contract 10 Service Tax Appeal No. 52224 of 2018 [DB] for the activity which can be called as the Mining Services and the activity which is Transportation Services. Also as apparent from the Section 66F as reproduced above, it is clear that when two separate activities are being provided even though under the single instrument or contract, those have to be treated as two separate activities and thus should be taxed separately. We draw our support from the decision of Hon'ble Supreme Court in the case of State of Madras Vs. Gannon Dunkerley & Co. (Madras) Ltd., reported as 1959 SCR 379, wherein it was held as follows:
"To avoid misconception, it must be stated that the above conclusion has reference to works contracts, which are entire and indivisible, as the contracts of the respondents have been held by the learned Judges of the Court below to be. The several forms which such kinds of contracts can assume are set out in Hudson on Building Contracts, at page 165. It is possible that the parties might enter into distinct and separate contracts, one for the transfer of materials for money consideration, and the other for payment of remuneration for services and for work done. In such case, there are really two agreements, though there is a single instrument embodying them, and the power of the State to separate the agreement to sell from the agreement to do work and render service and to impose a tax thereon cannot be questioned and will and untouched by the present Judgment."
In another decision titled as Jain carrying Corporation Vs. Commissioner of Central Excise, Jaipur, reported as 2015 (39) STR J370 SC, wherein it was held that if separate rates are provided for separate activities under a common agreement/instrument, the activities should be classified under their respective categories. Though the department has also relied upon several decisions but most of them pertains to the 11 Service Tax Appeal No. 52224 of 2018 [DB] comprehensive/composite contract. As already discussed above, it is not the fact for the contracts in question. 5.3 Seen from the definition of mining services as was brought into statute w.e.f. July 2007 and is made taxable under Section 65 (105) (zzzy), the section provides for a service tax on the service provided or to be provided to any person by any other person in relation to mining or mineral, oil or gas, the activity of transportation cannot be held as part of mining of mineral, oil or gas. Department's own Circular No. 232/2/2006-Cx. Dated 12.11.2007 also recognizes transportation as a post mining activity. The circular clarifies that transportation of mined minerals shall be taxable under GTA services. Hon'ble Supreme Court also in the case of Commissioner of Central Excise and Service Tax, Raipur Vs. Singh Transporters, reported as 2017 (4) GSTL 3 (SC) has held that transport of coal from pitheads to railway sidings within the mining area is classifiable under GTA service and not under the mining service. This Tribunal also in the case of Mirza Hasam (supra) and another decision in the case of Chhaya Mahalley Vs. Commissioner of Customs, Central Excise & CGST, Bhopal, reported as 2022 (12) TMI 460- CESTAT NEW DELHI has followed the aforesaid outcome of Hon'ble Supreme Court.
5.4 The adjudicating authority while declining the transportation activity as a GTA service has held that since there is no consignment note, the same cannot be held to be the GTA service. No doubt in terms of Rule 4B of Service Tax Rule, 1994, issuance of consignment note to the recipient of service is mandatory. But in 12 Service Tax Appeal No. 52224 of 2018 [DB] the present case, apparently and admittedly, there were issued transit slips having all such details as were to be mentioned in the consignment note. Hence just because the receipts/notes had a different nomenclature, it cannot be held that there was no consignment note. Otherwise also, this issue has already been decided by this Tribunal, Bangalore Bench, in the case of Coromandel Agro Products & Oils Ltd. Vs. Commr. of C. Ex., Guntur reported as 2014 (33) S.T.R 660 (Tri. Bang.), wherein it was held that non-issuance of consignment note can be the violation of Rule 4b of Service Tax Rules, however, recipient of service cannot refuse to pay the service tax on the basis that the service provided was not Goods Transport Service for want of the consignment note.
5.5 We further observe that similar issue in appellant's own case has also been already decided that too twice, vide the decisions in the case of Rashleela Enterprises Pvt. Ltd. Vs. CCE, Jaipur-I, reported as 2019 (2) TMI 675- CESTAT NEW DELHI and Rashleela Enterprises Pvt. Ltd. Vs. Commissioner of Central Excise Commissionerate, Alwar, reported as 2023 (7) TMI 201 CESTAT NEW DELHI, wherein it has been held that the appellant has got separate registration for both the categorizes of services i.e. Mining Services and GTA Services along with few other services. In the agreement also separate rates were mentioned for both the said activities. Thus, the concept of composite service is not applicable.
6. Keeping in view the earlier decisions of Hon'ble Supreme Court as discussed about the similar demand as the one in 13 Service Tax Appeal No. 52224 of 2018 [DB] question, the issue involved herein is observed to be no more res integra. The findings in order under challenge are otherwise. Hence, we do not find any reason to conform the order under challenge. Same is therefore set aside. Consequent thereto, the appeal stands allowed.
[Order pronounced in the open court on 18.01.2024] (DR. RACHNA GUPTA) MEMBER (JUDICIAL) (P.V. SUBBA RAO) MEMBER (TECHNICAL) HK