Custom, Excise & Service Tax Tribunal
Sanjay Singh Associates vs Commissioner, Central Excise And ... on 20 February, 2023
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. - IV
Service Tax Appeal No. 53049 of 2016 [DB]
[Arising out of Order-in-Appeal No. BHO-EXCUS-002-APP-329-15-16 dated
10.02.2016 passed by the Commissioner Central Excise, Customs & Service Tax
(Appeals), Tikrapa-Raipur)
M/s. Sanjay Singh Associates ...Appellant
Prop. Sanjay Singh,
Near Carbon House,
Nehru Nagar, Singrauli,
Dist: Singrauli - 486889 (M.P.)
VERSUS
Commissioner of Central Excise
and Service Tax, Bhopal ...Respondent
48, Administrative Area, Arera Hill, Hoshangabad Road, Bhopal (M.P.)-462015 APPEARANCE:
Mr. Prashant Shukla, Advocate for the Appellant Mr. Ravi Kapoor, Authorised Representative for the Respondent CORAM: HON'BLE DR. RACHNA GUPTA, MEMBER (JUDICIAL) HON'BLE MS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL) DATE OF HEARING: 20.02.2023 DATE OF DECISION: 20.02.2023 FINAL ORDER No. 50402/2023 DR. RACHNA GUPTA The present appeal is filed to assail the Order-in-Appeal No. BHO-EXCUS-002-APP-329-15-16 dated 10.02.2016 vide which the services rendered by the appellant have been confirmed to be in nature of 'Cargo Handling Services' and resultantly the demand in question has also been confirmed.
2. Facts in brief relevant for the present adjudication are as follows:
2
Service Tax Appeal No. 53049 of 2016 [DB] Based on intelligence and after scrutiny of work orders received from M/s. Northern Coalfields Ltd. (M/s. NCL), the department observed that the appellant is engaged in transporting coal in contractors tipping trucks including loading of coal into said trucks and in some cases loading into Railway wagons, both by the contractor's pay loaders. Department opined that said activity is squarely covered under the ambit of definition of 'Cargo Handling Services', as defined under Section 65(23) of the Finance Act, 1994. Resultantly, vide which the Show Cause Notice No. 85/2013 dated 18.10.2013, a demand of Rs.35,07,076/- for a period from September, 2008 to March, 2010 was proposed to be recovered from the appellant, alleging the same to be the tax liability for rendering the 'Cargo Handling Services' while transporting the coal to M/s. NCL. The said proposal was initially confirmed vide Order-
in-Original No. 93/2014 dated 13.10.2014. The appeal thereof has been rejected vide the order under challenge.
3. We have heard Shri Prashant Shukla, learned Advocate for the appellant and Shri Ravi Kapoor, learned Authorized Representative for the department.
4. Learned Counsel for the appellant has mentioned that the service rendered by the appellant is merely the transportation of coal in tipping trucks within the mining area after loading such coal on such trucks by pay loaders and as such it is not falling in the definition of 'Cargo Handling Services'. It is further mentioned that M/s. NCL had awarded contracts to the appellant merely for the transportation of coal through tippers. The loading and unloading is 3 Service Tax Appeal No. 53049 of 2016 [DB] merely an incidental activity to said transportation. It is mentioned that because of said incidental activity the services as that of 'Goods Transport Agency' cannot be called as 'Cargo Handling Services'. It is further mentioned that the 'Cargo Handling Service' is taxable only if such service has been provided by a 'Cargo Handling Agency'. Though the term has not been defined in the Act but there have been the circulars specifically Circular No. B11/1/2002-TRU dated 01.08.2002, explaining that the specific agencies only are liable to be taxed under 'Cargo Handling Services'. Those agencies have to be more than a transportation agency. Learned Counsel has relied upon the following decisions to impress upon that the service provided by the appellant was not a 'Cargo Handling Services':
(i) Mirza Hasam Vs. Commr. (Appeal) Cus, C. Ex. & S.T., Raipur reported in 2022 (67) G.S.T.L. 469 (Tri.-Del.)
(ii) N.C. Paul & Company Vs. Commissioner of Central Excise, Bolpur reported in 2020 (41) G.S.T.L. 494 (Tri.-
Kolkata)
(iii) Shokat Ali Vs. Commissioner of CGST & Central Excise, Bhopal reported in 2019 (28) G.S.T.L. 63 (Tri.-Del.)
(iv) Commissioner of CGST & C.Ex., Varanasi Vs. R.P.L. Projects Ltd. reported in 2019 (25) G.S.T.L. 113 (Tri.-All.)
(v) G.E. Power India Ltd. Vs. Commissioner of Service Tax, New Delhi reported in 2019 (24) G.S.T.L. 764 (Tri.-Del.)
(vi) Deputy Commissioner of Central Excise Vs. Sushil & Company reported in 2016 (42) S.T.R. 625 (S.C.) 4 Service Tax Appeal No. 53049 of 2016 [DB] The demand confirmed against him is therefore prayed to be set aside.
4.1 In addition, learned Counsel has also challenged the order on the grounds of limitation. It is submitted that demand for the period September 2008 to March 2010 has been proposed vide the show cause notice of October 2013. Extended period of limitation is mentioned to have wrongly been invoked. Learned Counsel has drawn our attention to the findings of original adjudicating authority in Para 29 where benefit of Section 80 of the Finance Act, 1994 has been given to the appellant accepting that appellant had reasonable belief about their non-liability to pay tax. It is impressed upon that the said reason is sufficient to not invoke the extended period of limitation. Learned Counsel has also mentioned that the issue otherwise was already in the notice of the department as in the year 2007, a show cause notice was issued to M/s. NCL wherein it was held that in the given circumstances, it is M/s. NCL which is liable to pay tax, the services in question being the 'Goods Transportation Service'. Thus seen from this observation also no suppression of facts can be alleged against the appellant. Hence, there remains no ground from invoking extended period of limitation. The show cause notice would have been issued during the normal period. To support these contentions, learned Counsel has relied upon the following decisions:
(i) Sankhla Udyog Vs. Commissioner of C.Ex. & S.T., Jaipur reported in 2015 (38) S.T.R. 62 (Tri.-Del.)
(ii) Rajasthan Renewable Energy Corporation Ltd. Vs. Commr. of C. Ex., Jaipur - I reported in 2017 (51) S.T.R. 269 (Tri.-Del.) 5 Service Tax Appeal No. 53049 of 2016 [DB]
(iii) Commr. of C. Ex., Jaipur-I Vs. Rajasthan Renewable Energy corpn. Ltd. reported in 2018 (15) G.S.T.L. 661 (Raj.)
(iv) Rochem Separation Systems (India) P. Ltd. Vs. Commr. of S.T., Mumbai-I reported in 2015 (39) S.T.R. 112 (Tri.-Mumbai)
(v) Commr. of S.T., Mumbai - IV Vs. Rochem Separation Systems (I) P. Ltd. reported in 2019 (23) G.S.T.L. 446 (Bom.)
(vi) Continental Foundation Jt. Venture Vs. Commr. of C. Ex., Chandigarh - I reported in 2007 (216) E.L.T. 177 (S.C.) With these submissions the order under challenge is prayed to be set aside and appeal is prayed to be allowed.
5. While rebutting these submissions, learned DR has mentioned that for a service to be classified under 'Goods Transport Service', it is mandatory that the agency should have issued a consignment note. In the present case, admittedly M/s. NCL had not issued any consignment note. Para 10 of the order under challenge is relied upon by learned DR. Learned DR has further impressed upon the correctness about the findings recorded in Para 11 of the order under challenge. It is submitted that there is no infirmity in the findings while holding the impugned services as 'Cargo Handling Services'.
5.1 While submitting upon the issue of invoking the extended period of limitation, learned DR has brought to our notice that the appellant despite providing the taxable services had not applied for registration. It was only after the scrutiny done by the department 6 Service Tax Appeal No. 53049 of 2016 [DB] in the appellant's records that the fact of appellant providing a taxable service came to the notice of the department. This failure on the part of the appellant is the sufficient act of suppression of relevant facts, the extended period has thus been rightly invoked. With these submissions the present appeal is prayed to be dismissed.
6. While rebutting the submissions made by learned DR about obtaining registration, learned Counsel for the appellant has mentioned that the appellant was purely involved in the activity of transporting coal for M/s. NCL in the mining area itself. The activity of loading, unloading etc. is reiterated to be the incidental one. It is further mentioned that for the services as that of 'Goods Transport Agency' the liability has to be discharged by reverse mechanism by the service recipient. Learned Counsel reiterated the findings as recorded in Para 28 of Order-in-Original with respect to the earlier show cause notice of the year 2007 thereof, wherein it has been specifically recorded that the activity in question has already been held to be a 'Goods Transport Agency Service' for which M/s. NCL has already held liable. It is reiterated that those findings were sufficient for the bona fide belief with the appellant that they have no liability to be discharged under service tax regime nor to get themselves registered. The submissions on behalf of department are prayed to be rejected.
7. Having heard the rival submissions of the parties, perusing the records, we hereby observe and hold as follows: 7
Service Tax Appeal No. 53049 of 2016 [DB] To appreciate the contentions herein, foremost, it would be appropriate to first go through the definition of 'Cargo Handling Service' and 'Goods Transport Agency Services'. The former being defined under Section 65(23) of the Finance Act, 1994 and is taxable under Section 65(105)(zr) of the Act and the latter is defined under Section 65(50b) of the Act which is taxable under Section 65(105)(zzp) of the Act. Both are reproduced as follows:
"65(23)- '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- containerised freight, services provided by a container freight terminal or any other freight terminal, for all modes of transport and cargo handling service incidental to freight, but does not include handling of export cargo or passenger baggage or mere transportation of goods."
"65(50b)- 'goods transport agency' means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called."
The perusal of definition of Section 65(23) of the Act makes it clear that the 'Cargo Handling Service' is an activity which requires:
(i) A cargo,
(ii) To be transported from freight terminal
(ii) The activity has to be taken up by an agency specifically involved in the activity of 'Cargo Handling Services'.
8. No doubt the 'Cargo Handling Service' has nowhere been defined in the Act, but the department's Circular No. B11/1/2002- TRU, dated 01-08-2002 as has been impressed upon by the learned Counsel for the appellant explains that the services of transporting coupled with loading, unloading, packing, unpacking can be called 8 Service Tax Appeal No. 53049 of 2016 [DB] as 'Cargo Handling Service' if those are done by the authorities as that of Container Corporation of India, Airport Authority of India, Inland Container Depot, Container Freight Stations etc. Apparently and admittedly the appellant herein is none of these kinds of companies. Hon'ble Supreme Court also while discussing the case of Sushil & Company (supra) has appreciated the said circular in the following words:
"Mr. Kavin Gulati, learned senior counsel appearing for the respondent-assessee, has drawn our attention to a judgment of the Delhi Bench of the Tribunal in "J. & J. Enterprises v. Commissioner of Central Excise, Raipur," reported in 2006 (3) S.T.R 655 = 2005 (186) E.L.T 189 (Tribunal). In this judgment, almost similar services provided by the assessee were held not to be 'Cargo Handling Services'. In arriving at such a conclusion, the Tribunal had referred to the clarificatory instructions, being F. No. B11/1/2002-TRU, dated 1-8-2002 and the relevant portion therein was extracted at Paragraphs 3 and 15. These paragraphs read as under:-
"3. The services which are liable to tax under this category are the services 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 namely truck, rail, ship or aircraft. Well known examples of cargo handing service are services provided in relation to cargo handling by the Container Corporation of India, Airport Authority of India, Inland Container Depot, Container Freight Stations. This is only an illustrative list. There are several other firms that are engaged in the business of cargo handling services.
xx xx xx
15. Another doubt raised in relation to cargo handling services is that whether individuals undertaking the activity of loading or unloading of cargo would be leviable to service tax. For example, if someone hires labour/labourer for loading or unloading of goods in their individual capacity, 9 Service Tax Appeal No. 53049 of 2016 [DB] whether he would be liable to service tax as a cargo handling agency. It is clarified that such activities will not come under the purview of service tax as a cargo handling agency."
9. Hon'ble Supreme Court has accepted Hon'ble High Court interpretation to the Entry viz. 'Cargo Handling Service' where it was observed that there must be a cargo i.e. a packed or unpacked commodity accepted by a transporter or carrier for carrying the same from one destination to another. It is only after the commodity becomes a cargo, its loading and unloading at the freight terminal for being transported by any mode becomes a cargo handling service, if it is provided by an independent agency and the service provider must independently be involved in loading- unloading or packing-unpacking of the cargo. Also from the various decisions as relied upon by the appellant, we observe that issue has several times been adjudicated by this Tribunal. Mirza Hasam (supra) is the latest judgment. In this decision the earlier decision of Hon'ble Supreme Court in the case of Singh Transporters Vs. Commissioner of Central Excise, Raipur reported as 2012 (27) S.T.R. 488 has been dealt with. The issue involved therein also was as to whether the coal transported from pitheads of the mines to the railway sidings would fall within the taxable service as defined under Section 65(105)(zzzy). Though the service in question in the said case was as to whether it was a mining service but the outcome is relevant for the present adjudication wherein it was held that the aforementioned activity is an activity as that of transportation of goods. The Hon'ble Apex Court in the said decision has held as follows:
10
Service Tax Appeal No. 53049 of 2016 [DB] "3. The issue involved in the present appeal is whether the goods i.e. coal transported by the respondent - Singh Transporters from the pit-heads to the railway sidings would fall within taxable service as defined under Section 65(105) (zzzy) of the Service Tax Act of 1994 (for short "the Act") or as defined under Section 65(105)(zzp) of the Act.
xx xx xx
6. Be that as it may, even if the relied upon judgment in the case of Anjuna Carriers (supra) is of no consequence to the present case, we are of the view that the activity undertaken by the respondent i.e. transportation of coal from the pit-heads to the railway sidings within the mining areas is more appropriately classifiable under Section 65(105)(zzp) of the Act, namely, under the head "transport of goods by road service" and does not involve any service in relation to "mining of mineral, oil or gas" as provided by Section 65(105)(zzzy) of the Act.
7. The reliance placed on the definition of the term 'mines' under Section 2(j) of the Mines Act, 1952 does not assist the Revenue inasmuch as what would be indicated by the said definition is that a mine is not to be understood necessarily in respect of pit-heads of the mining area or the excavation or drilling underground, as may be, but also to the peripheral area on the surface. The said definition has no apparent nexus with the activity undertaken and the service rendered."
Kolkata Tribunal also in the decision of N.C. Paul & Company (supra) has held as follows :
" the dominant activities under the contract are movement of mineral within the mining area and loading to Railway Wagon, which includes loading and unloading, are merely incidental while the activities undertaken are principally transportation of coal within the mining area, hence, the gross amount received for the same cannot be taxed under the category of Cargo Handling Services. Therefore, we are of the view that the Service Tax demand of Rs.2,47,60,534/-11
Service Tax Appeal No. 53049 of 2016 [DB] on activities of transportation with incidental loading and unloading including wagon loading is principally and dominantly for transportation of coal within the mines and hence, cannot be taxed under the category of Cargo Handling Service and accordingly, set aside."
10. We also observe that department itself from time to time has been issuing several circulars clarifying this overlapping of two services with respect to one activity of transporting load through truck tippers. One such circular is dated 06.08.2008. It reads as follows:
"3. Issue : GTA provides service to a person in relation to transportation of goods by road in a goods carriage. The service provided is a single composite service which may include various intermediary and ancillary services such as loading/unloading, packing/unpacking, transshipment, temporary warehousing. For the service provided, GTA issues a consignment note and the invoice issued by the GTA for providing the said service includes the value of intermediary and ancillary services. In such a case, whether the intermediary or ancillary activities is to be treated as part of GTA service and the abatement should be extended to the charges for such intermediary or ancillary service?
Clarification: GTA provides a service in relation to transportation of goods by road which is a single composite service. GTA also issues consignment note. The composite service may include various intermediate and ancillary services provided in relation to the principal service of the road transport of goods. Such intermediate and ancillary services may include services like loading/unloading packing/unpacking, transshipment, temporary warehousing, etc., which are provided in the course of transportation by road. These services are not provided as independent activities but are the means for successful provision of the principal service, namely, the transportation of goods by road. The contention that a single composite service should not be broken into its components and classified as separate services is a 12 Service Tax Appeal No. 53049 of 2016 [DB] well accepted principle of classification. As clarified earlier vide F.No. 334/4/2006-TRU, dated 28-2-2006 (Paras 3.2 and 3.3) [2006 (4) S.T.R. C30] and F.No. 334/1/2008-TRU, dated 29-2- 2008 (Paras 3.2 and 3.3) (2008 (9) S.TR. C61], 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. While taking a view, both the form and substance of the transaction are to be taken into account. The guiding principle is to identify the essential features of the transaction. The method of invoicing does not alter the single composite nature of the service and classification in such cases are based on essential character by applying the principle of classification enumerated in Section 65A. Thus, if any ancillary/intermediate service is provided in relation to transportation of goods, and the charges, if any, for such services are included in the invoice issued by the GTA, and not by any other person, such service would form part of GTA service and, therefore, the abatement of 75% would be available on it."
11. Subsequent has been a Circular No. 186/5/2015-S.T. dated 05.10.2015, wherein it has been clarified that if GTA Service provider is providing certain ancillary services such as loading/unloading, packing/unpacking, transshipment and temporary storage in the course of transport of goods by road then value of such ancillary services should be counted towards GTA Services. He has further submitted that learned Original Authority has relied on said CBEC Circular as one of the grounds for his decision. He has also submitted that the issue is covered by the decision of this Tribunal in the case of M/s. Rungta Projects Ltd. v. CCE reported at 2017-TIOL-3782-CESTAT = 2018 (9) G.S.T.L 404 (Tri.-All.). We also observe that in the case of Tycoon Industries Pvt. Ltd. V. CST reported in 2019-TIOL- 1509-CESTAT-Kol, it is held by this Tribunal while dealing with similar facts and circumstances, that the dominant activities under 13 Service Tax Appeal No. 53049 of 2016 [DB] the contract are movement of mineral within the mining area and loading to Railway Wagon, which includes loading and unloading, are merely incidental while the activities undertaken are principally transportation of coal within the mining area, hence, the gross amount received for the same cannot be taxed under the category of Cargo handling Services. Therefore, we are of the view that the Service Tax demand of Rs.2,47,60,534/- on activities of transportation with incidental loading and unloading including wagon loading is principally and dominantly for transportation of coal within the mined and hence, cannot be taxed under the category of Cargo handling Service and accordingly, set aside.
12. In the light of entire above discussion, we observe that the only reason given by the adjudicating authority for declining the impugned activity to be of that 'Goods Transport Service' is the absence of the consignment note. To our opinion, the mere absence of consignment note is highly insufficient to hold that the activity in question even is not a goods transport agency. The absence of consignment note cannot be the basis for changing classification of the service from 'Goods Transport Agency' service to 'Cargo Handling Service'. With these observations and findings we hold that activity of the appellant has wrongly been held as a 'Cargo Handling Service'. The demand resultantly is held to have wrongly confirmed.
13. Coming to the aspect of limitation as brought to our notice, the findings of original adjudicating authority in Para 29 of the Order-in-Original, we find that Section 80 of Finance Act, 1994 has 14 Service Tax Appeal No. 53049 of 2016 [DB] been invoked. This Section permits certain cases where the penalty may not be imposed. While invoking the said section the authority has recorded that party is found to have a reasonable ground to believe that they were not liable for payment of service tax on the impugned activity. Once it is a case of bona fide belief, penalty cannot at all been fastened. This issue is also no more res integra. It has clearly been held that once assessee is not held liable to pay the penalty for the purpose of Section 80 because of bona fide doubt they entertained, for the said reason, it cannot be said that the case falls in any of the categories under proviso to Section 73 (1) of the Act. We draw our support from the decision of this Tribunal, Mumbai Bench, in the case of Rochem Separation Systems (India) Pvt. Ltd. (supra).
14. Further, from the findings in Para 28 of the Order-in-Original as have merged in the order under challenge, we hold that the issue was already in the notice of the department. In fact, there already had been a show cause notice served not only upon the appellant but also on M/s. NCL and it was M/s. NCL who were fastened with the liability to pay tax under Reverse Charge Mechanism for receiving 'Goods Transport Agency Service'. Nothing has been brought on record about those findings to either being challenged or being reversed. In the given circumstances, we do not find existence of any such circumstance as would have entitled the department for invoking the extended period of limitation. Hon'ble Apex Court in the case of Continental Foundation Jt. Venture (supra) has clarified that there cannot be any suppression or mis-statement of fact which is not willful. 15
Service Tax Appeal No. 53049 of 2016 [DB]
15. Though, learned DR has impressed upon the absence of registration in the name of the appellant as an act of suppression on the part of the appellant but from the findings above it stands concluded that services in question are not the 'Cargo Handling Services' but are 'Goods Transportation Agency' service. The liability whereof has to be discharged by the recipient thereof under reverse charge mechanism. The recipient in the present case is M/s. NCL. hence, we do not find any reason with appellant to have registration under service tax regime. We accordingly hold that the impugned show cause notice has been issued after wrongly invoking the extended period of limitation. Hence, the show cause notice is held to be barred by limitation.
16. As a consequence of entire above discussion, the Order under challenge is hereby set aside. Consequent thereto, the appeal stands allowed.
[Dictated and pronounced in the open Court] (DR. RACHNA GUPTA) MEMBER (JUDICIAL) (HEMAMBIKA R. PRIYA) MEMBER (TECHNICAL) HK