M/S.Tm Logistics International ... vs Assistant Commissioner on 29 September, 2021

[Cites 8, Cited by 0]

Orissa High Court

M/S.Tm Logistics International ... vs Assistant Commissioner on 29 September, 2021

Equivalent citations: AIRONLINE 2021 ORI 430

10. 1. The challenge in all these writ petitions is two-fold. First is to a circular dated 1st August, 2002 issued by the Central Board of Excise and Customs issuing a whole series of clarifications as regards amenability of various services to service tax. Relevant to the present petitions is the clarification in para 5 of Annexure-2 of the said circular pertaining to „cargo handling service‟.

2. The other challenge is to the show cause notices (SCNs) issued to the Petitioners by the Assistant Commissioner, Central Excise and Customs, Cuttack Division, Cuttack and Commissioner, Central Excise, Customs and Service Tax, Bhubaneswar-I calling upon the Petitioners to pay service tax in relation to service rendered towards handling of export cargo which according, to the Department "falls within the scope of „port services‟ as there is no exclusion of any such service in the definition of „port service‟ under Section 65 of the Finance Act".

3. Mr. B.L. Narasimhan, learned counsel appearing for the Petitioners, has placed strong reliance on decisions of the Karnataka High Court in Commissioner of Central Excise, Mangalore v. Konkan Marine Agencies 2009 (13) S.T.R. 7 (Kar) and of the Kerala High Court in Kerala State Industrial Enterprises Ltd. v. C.C.R., C. & S.T., Kochi, 2012 (28) S.T.R. 574 (Ker) and has argued that the service rendered by the Page 3 of 6 Petitioners falls outside the scope of „port service‟ as defined under Section 65 (82) of the Finance Act, 1994 (FA). It is argued that the above circular seeks to equate the stevedoring services undertaken by the Petitioners as „port service‟ while in fact it is not so. He adds that to the extent that the Petitioners have performed „cargo handling service‟, as defined under Section 2 (23) of the Finance Act, 1994 for import services, the Petitioners have in fact been assessed to and paid the applicable service tax. It is submitted that inasmuch as the handling of export cargo has expressly been excluded from Section 65 (23) of the FA, the Department cannot by means of the aforementioned circular indirectly make amenable to service tax what has expressly been excluded from its purview by the statute.

3. Mr. Ch. Satyajit Mishra, Senior Standing Counsel appearing for the Department on the other hand has placed before this Court a decision of the Supreme Court in Union of India (UOI) vs. Coastal Container Transporters Association, 2019 (3) SCALE 758 where the question was whether the services rendered by the Respondents in that case was „cargo handling‟ or „goods transport‟? The Supreme Court reversed the decision of the High Court of Gujarat dated 18th December, 2017 in Special Civil Application No.6679 of 2016 which had in under similar circumstances quashed the SCNs by interpreting the circular dated 1st August, 2002, which has been challenged in the present petitions as well.

4. It is seen that the Supreme Court in the above decision, while setting aside the judgment of the Gujarat High Court on the Page 4 of 6 ground that in a writ petition under Article 226 of the Constitution of India, the High Court should not have interfered at the stage of an SCN, relied on an earlier decision in Union of India vs. Guwahati Carbon Limited (2012) 11 SCC 651. The Supreme Court further clarified in relation to the circulars that while it was "true that circulars issued by the CBEC are binding on the authorities, but at the same time, whether such circulars are applicable or not, is a matter which is to be considered with reference to the facts of each case. When it is the case of the Appellants that such circulars referred above would apply only in case of road transportation but not otherwise, then it is a case for consideration by competent authority on receipt of the explanation but same is no ground to quash the show cause notices."

5. Having considered the above submissions, the Court is of the view that since the Petitioners have approached this Court under Article 226 of the Constitution at the stage of the SCNs, this Court ought not to entertain the petitions at this stage. In doing so, this Court follows the decisions of the Supreme Court in Union of India v. Guwahati Carbon Limited (supra) as well as Union of India v. Coastal Container Transporters Association (supra).

6. Mr. Narasimhan, learned counsel appearing for the Petitioners then urged that this Court should clarify that the adjudicating authority would not be bound by the aforementioned circular dated 1st August, 2002. The Court clarifies that it will be open to the Petitioners to urge all the grounds urged by them in the Page 5 of 6 present petitions before the adjudicating authority including placing reliance on the aforementioned decisions of the Kerala High Court and Karnataka High Court to urge that the aforementioned circular cannot by itself make an amenable the cargo handling service rendered by the Petitioners for export to service tax by categorizing it as „port service‟. The adjudicating authority will consider those submissions and pass an appropriate order in accordance with law after considering the aforementioned decisions of the High Courts of Karnataka and Kerala.

7. Considering that the SCNs are from 2005 onwards, the Court directs that the Petitioners will file replies, and if already filed further replies, not later than 1st November, 2021. Subject to the said direction being complied with, the adjudicating authority is requested to dispose of the SCNs by passing appropriate orders thereon in accordance with law not later than three months thereafter. The date of hearing on the SCNs will be intimated to the Petitioners at least one week in advance.

8. With the above observations, the Court vacates the interim orders and disposes of all the writ petitions.

(Dr. S. Muralidhar) Chief Justice ( B.P. Routray) Judge B.K. Barik Page 6 of 6

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