Custom, Excise & Service Tax Tribunal
Pearl Logistics Services vs Cce Mumbai - Ii on 5 August, 2019
CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, MUMBAI
REGIONAL BENCH
Service Tax Appeal No. 88538 of 2014
(Arising out of Order-in-Original No. 48 & 49/ST/RN/CMR/M-II/13-14
dated 16.04.2014 passed by Commissioner of Central Excise, Mumbai-
II)
M/s. Pearl Logistics Services Appellant
B-106, Great Eastern Summit,
Sector 15, CBD Belapur,
Navi Mumbai 400 614.
Vs.
Commissioner of Central Excise Respondent
Mumbai-II
9th floor, Piramal Chambers,
Jijibhoy Lane, Lalbaug,
Parel, Mumbai 400 012.
Appearance:
Shri S.P. Mathew, Advocate for the Appellant
Shri Suresh Merugu, Authorised Representative for the
Respondent
CORAM:
Hon'ble Mr. S.K. Mohanty, Member (Judicial)
Hon'ble Mr. Sanjiv Srivastava, Member (Technical)
FINAL ORDER NO. A/86341/2019
Date of Hearing: 06.05.2019
Date of Decision: 05.08.2019
PER: SANJIV SRIVASTAVA
This appeal is directed against the order in original
No 48 & 49/ST/RN/CMR/MII/13-14 dated 16.04.2014 of
Commissioner Central Excise Mumbai-II. By the impugned
order Commissioner has held as follows:
"44.a. I confirm the demand of Service Tax (including
education cess & higher education cess) under following
SCNs
2 ST/88538/2014
i) F No DGCEI/MZU/I&IS'D'/12(4)198/08 dated
20.04.2009 for Rs 2,20,09,159/- &
ii) F No V/Adj/Addl/ST-II/PLS/15-146/2010 dated
22.04.2010 for Rs 13,25,809/-
issued to M/s Pearl Logistics Services, totaling to
Rs.2,03,12,586/- (Rupees Two Crore Three Lakhs Twelve
Thousand Eight Hundred and Nine Only) & order recovery
of the same from M/s Pearl Logistics Services under
proviso (1) of Section 73 of the Finance Act, 1994 read
with section 68 of the Act and Rule 6 of the Service Tax
Rules, 1994 as amended.
b. Interest on the amount of demand determined at 'a)'
at the appropriate rate should be paid by M/s Pearl
Logistics Services under Section 75 of the Act;
45.a. I impose a penalty of Rs.2,03,12,586/- (Rupees Two
Crore Three Lakhs Twelve Thousand Eight Hundred and
Nine Only) on M/s Pearl Logistics Services under provisions
of Section 78 of the Finance Act, 1994.
b. for the period prior to 16.05.2008, I also impose a
penalty under Section 76 of the Finance Act, 1994 on M/s
Pearl Logistics Services as follows:
i) from Oct'03 to 09.09.2004: imposed a penalty of Rs
200/- for every day.
ii) from 10.04.2006 to 17.04.2006: '...... a penalty of
one hundred rupees for every day which such failure
continues, however, the penalty under the clause shall not
exceed the amount of service tax that he failed to pay.'
iii) from 18.04.2006 to 15.05.2008: '...... a penalty of
two hundred rupees for every day or at rate of two percent
of such tax per month, whichever is higher, starting with
the first day after the due date till the date of actual
payment of the outstanding amount of service tax.'
c) I impose a penalty of Rs 5000/- (Rupees Five
Thousand Only) on M/s Pearl Logistics Services, under
3 ST/88538/2014
provisions of Section 77 of the Finance Act, 1994, as
applicable at the relevant period.
46. The remaining demand of Rs 30,22,382/- (Rs
2,33,34,968/- - Rs 2,03,12,586/-) raised in the impugned
SCNs is dropped."
2.1 Acting on intelligence that Appellants were providing
"Cargo Handling Services" and were evading Service Tax
as they had not obtained any Service Registration nor paid
any service tax due on the services provided,
investigations were undertaken by the officers of Director
General Central Excise Intelligence, Zonal Unit Mumbai.
After completion of investigations a Show Cause Notice
i. dated 20th April 2009 was issued to them asking
them to show cause as to why:
i) the said services provided by them to their
customers, as discussed above, should not be
classified under the category of cargo handling
services under Section 65(23) (as amended) read
with Section 65(105)(zr) in respect of the services
provided by them to CWC;
ii) the said services as provided by them to their
customers, as discussed above, should not be
classified under the "Supply of Tangible Goods
Services" under section 65(105)(zzzzj) of the Act
in respect of equipments let out by them on hire
to various customers during the relevant period;
iii) the charges recovered by them from their
customers towards cargo handling during the
period from October'03 to September'08, totally
amounting to Rs 20,03,84,438/- and towards
"Supply of Tangible Goods Services" during the
period 16.05.08 to September 2008 totally
amounting to Rs 47,93,793/- which appear to
have escaped payment of ST, should not be
considered as the taxable value and service tax
4 ST/88538/2014
demanded accordingly, in terms of section 67 of
the Act.
iv) The service tax including education cess
amounting to Rs 2,20,09,159/- (Rupees Two
Crore Twenty Lakhs Nine Thousand One Hundred
and Fifty Nine only), as detailed in Annexure-I
should not be demanded and recovered from
them under proviso to Section 73(1) read with
Section 66 and Section 68 of the said Act under
"cargo handling services" and under "Supply of
Tangible Goods Services"
v) Appropriate interest on the amount of ST, being
assessed should not be recovered from them at
applicable rate(s) under section 75 of the said
Act.
vi) Penalty as provided for under section 76 of the
said Act should not be imposed on them;
vii) The penalty for contravention of any provision of
the said Act or any rule made there under should
not be imposed on them as provided for under
section 77 of the said Act;
viii) The penalty for suppressing the value of taxable
services with an intent to evade payment of ST
should not be imposed on them as provided for
under section 78 of the said Act;
ii. dated 22.04.2010 was issued on the same grounds
demanding service tax of Rs 13,25,809/- covering the
period from October 2008 to September 2009.
2.2 Both the show cause notices have been adjudicated
by the Commissioner as per the impugned order referred
in para 1, supra.
2.3 Aggrieved by the order of Commissioner, appellants
have preferred this appeal.
3.1 Appellants have in their appeal challenged the
impugned order on following grounds-
5 ST/88538/2014
They had on the invoices shown handling and
transportation charges separately and thus were
entitled for exemption "transport of goods by road
service", where the charge is less than Rs 750 as per
notification No 34/2004-ST. They have supported the
claim by way of sample invoices and certificate from
Chartered Accountant. However such claim has been
ignored by Commissioner.
Commissioner has stated that dominant nature of
the service was cargo handling and hence has
included this value in the value of taxable services,
contrary to the clarification issued vide F No
B11/1/2002-TRU dated 01.08.2002.
Since the transportation charges have been
separately mentioned by them on the invoice, the
finding of Commissioner that they are on
presumptive basis is erroneous.
They were sub contractors to CWC for providing the
said services to shipping companies, importers and
exporters. Thus the main contractor was paying the
service tax on the services provided through sub
contractor like them, hence the demand of service
tax from them cannot be sustained. {Board Circular
F No B.43/1/97-TRU dated 9.6.97, F No B.43/5/97-
TRU dated 2.7.1997, F No b11/1/98-TRU dated
7.10.1998, F No B 11/1/2001-TRU dated 9.7.2011
and Delhi Commissionerate Trade Notice No
53/CE(ST)/97 dated 4.9.1997}.
Investigations in the matter started in March 2006
and lasted for a period of three years as the show
cause notice was issued on 20.04.2009, hence the
demand is barred by limitation.
Order is cryptic and non speaking as it fails to take
into account the various issues raise d by them in
defence.
6 ST/88538/2014
Demand to Extent of Rs 7,15,585/- under the
category of 'supply of tangible goods' is bad in law in
view of the decision of Kerala High Court on the
issue.
Penalties under Section 76 and 78 have been
imposed simultaneously which is contrary to settled
position in law.
4.1 We have heard Shri S P Mathew, Advocate for the
Appellants and Shri Suresh Merugu, Joint Commissioner,
Authorized Representative for the revenue.
4.2 Arguing for the Appellants learned Counsel submitted
that-
Service tax ought not to have been demanded on
cargo handling services pertaining to export cargo
and charges towards mere transportation of cargo
and containers being excluded from the definition
itself.
Commissioner had called for trifurcation of gross
amount into amounts receive on account of-
o Import cargo handling
o Export cargo handling
o Mere transportation of empty and stuffed
containers.
They had submitted the said trifurcation duly
supported by the certificate from the Chartered
Accountant. On the basis of the Chartered
Accountant Certificate commissioner has given the
relief in respect of Export Cargo handling and
dropped the demand of Rs 30,22,382/- relatable to
Export Cargo Handling. However he has not
extended the same benefit in respect of Pure
transportation of containers containing import cargo
without involving provision of cargo handling
services and only transportation and handling of
empty containers.
7 ST/88538/2014
Commissioner has failed to give the benefit of cum
tax value while confirming the demand against them
in respect of cargo handling services. Contrary to
decision of tribunal in case of Advantage Media
Consultant [2008 (10) STR 449 (T-Kol)]. He has
extended the said benefit in respect of
Their submissions on limitation have not been
considered by the Commissioner and no justification
given by the Commissioner for invoking extended
period of limitation. They rely on the decisions in
case of Gajanand Agarwal [2009 (13) STR 138 (T-
Mum)] & Vishal Traders [2010 (19) STR 509 (T-Del)]
They are seeking relief to the extent of deduction of
charges respect of pure transportation of containers
containing import cargo without involving provision
of cargo handling services and only transportation
and handling of empty containers amounting to Rs
7,28,09,956/- from total taxable value of cargo
handling services determined by the commissioner.
This will, reduce the total demand by Rs.
79,51,362/-.
4.3 Arguing for the revenue, learned Authorized
Representative submitted that-
It is not disputed that appellants are providing cargo
handling services. {Maharaja Group and Associates
[2016 (41) STR 681 (T-Del)], J K Transport {2006
(2) STR 3 (T-Del)]
Commissioner has allowed the benefit by dropping
the demand in respect of handling of export cargo.
Commissioner has confirmed the demand in respect
of import cargo handling.
Appellants were not in position to satisfy that in their
case there was actual bifurcation in respect of
charges towards handling of import cargo and mere
8 ST/88538/2014
transportation charges etc as claimed by the
appellants.
The cargo handling services have been provided by
the appellants to M/s CWC under a contractual
agreement. Commissioner has specifically recorded
in his order that on being asked, M/s CWC did not
provided the details of such bifurcation as claimed by
the appellant. Thus it is not correct to claim that
appellants had undertaken mere activity of
transportation of such cargo. Since such bifurcation
is not available or satisfactorily explained
Commissioner has correctly considered the entire
amounts collected from M/s CWC in respect of import
cargo to be towards cargo handling services.
{Gajanand Agarwal [2009 (13) STR 138 (T-Kol)]
Same view has been taken by the tribunal in case of
Sarvodaya Shramik Kalyan Samiti [2017-TIOL-1679-
CESTAT-Del] and Gangadhar Bulk Movers Pvt Ltd.
[2012 (27) STR 258 (T-Mum)]
Issue of liability to service tax on sub contractor has
been settled by the tribunal in case Sunil Hi-Tech
Engineers Ltd [2014 (36) STR 408 (T-Mum)] holding
that Sub contractor is liable to pay service tax even
if the main contractor was paying the service tax.
It is now settled law that penalties under Section 76
and 78 can be imposed simultaneously [Gondwana
Engineers Ltd [2018-TIOL-3847-CESTAT-Mum]
Since during the relevant period appellants had not
been filing the ST-3 return and not declaring the
details of services provided by them in the manner
prescribed extended period of limitation has been
rightly invoked.[Star India Pvt Ltd [2015 (38) STR
884 (T-Mum)]
5.1 We have considered the impugned order along with
the submissions made in appeal and during the course of
hearing of appeal.
9 ST/88538/2014
5.2 Appellants do not dispute with regards to levy of
service tax in respect of taxable services rendered by them
under the taxable category of "Cargo Handling Services"
for the import cargo. However the dispute is in manner of
calculation of taxable value for such services. Relying on
the definition of Cargo handling Services and various
clarifications issued by the Board they contest inclusion of
following amounts charged by them in the value of taxable
services provided by them:-
i. Towards mere transportation of containers
containing import cargo without involving provision
of cargo handling services. (Rs 6,61,86,181/-)
ii. Towards transportation and handling of empty
containers. (Rs 66,23,775/-)
5.3 Appellants have submitted that for excluding these
charges from the taxable value, they had furnished the
certificate from Chartered Accountant, certifying that these
amounts should not have formed the part of taxable value.
However Commissioner has rejected the submissions made
by tem stating that-
"40.1 I observe that the noticee has submitted the
Certificate from the Chartered Accountant certifying the
data, same is tabulated below:
Sr Financial Total Amount Amount Amount Amount
No Year/ amount billed billed billed received
Period billed (in towards towards towards towards
Rs) cargo cargo transportatio supply of
Excluding handling handling n of goods tangible
Service Tax export import goods
1 Oct 03- 1,60,09,527 1,51,25,297 4,50,045 4,34,185
Mar 04
2 2004-05 4,66,18,893 1,25,16,095 2,08,08,693 1,32,94,105
3 2005-06 6,84,50,123 0 3,89,25,719 2,95,24,404
4 2006-07 5,92,34,698 71,68,078 3,25,12,184 1,95,54,436
5 2007-08 1,43,71,279 0 83,56,508 60,14,771
6 Apr 08- 1,01,56,779 0 29,66,621 24,02,334 47,87,824
Sep 08
10 ST/88538/2014
7 Oct 08- 1,04,16,287 51,52,302 19,60,979 15,85,721 17,17,285
Sep 09
Total 22,52,57,58 3,99,61,772 10,59,80,74 7,28,09,956 6,505,109
6 9
The exemption to the charges incurred for transportation
of goods as claimed in the Certificate of Chartered
Accountant is not allowable for import component because
as has been held above that this amount is part of the
cargo handling services of the noticee. The dominant
activity is of cargo handling and the transportation being
incidental an being composite part of the service of cargo
handling. Secondly, the noticee has taken the figure of
transportation charges just on presumptive basis as they
themselves have replied that they have requested the
CWC for the breakup of transportation cost, however the
CWC has not provided the same. In any case as discussed
earlier it is not mere transportation of goods service but
part of cargo handling service, hence no exemption is
available separately for this part of charges.
From the invoice & worksheet, summary submitted by the
assessee following data emerges:-
Sr As per Bill Export Import ST S Tax
No DGCEI Amount cargo Rate
handling
Charges
(Taxable
Value)
1 01.10.03 16014125 16009527 15125297 884230 8.00 70738
to
31.03.04
2 01.04.04 5801427 15800062 11203520 4596542 8.00 367723
to
09.09.04
3 10.09.04 30491426 30818831 1312575 29506256 10.20 3009638
to
31.03.05
4 01.04.05 28101397 30845935 0 30845935 10.20 3146285
to
30.09.05
5 01.10.05 38924876 37604188 0 37604188 10.20 3835627
to
31.03.06
6 01.04.06 10773542 2845058 0 2845058 10.20 290196
to
17.04.06
7 18.04.06 31189718 34571569 0 34571569 12.24 4231560
to
11 ST/88538/2014
30.09.06
8 01.10.06 17889348 21818071 7168078 14455494 12.24 1769352
to
31.03.07
9 01.04.07 1436636 1987427 0 1987427 12.24 243261
to
10.05.07
10 11.05.07 6686160 5552452 0 5552452 12.36 686283
to
30.09.07
11 01.10.07 8213121 6831401 0 6831401 12.36 844361
to
31.03.08
12 01.04.08 4862663 5411731 0 5368954 12.36 663603
to
30.09.08
Total 20038443 21009625 34809470 17504950 1915862
9 2 6 7
01.10.08 8996670 8941379 5152302 3546700 12.36 438372
to
31.12.08
Grand Total 20938110 21903763 39961772 17859620 1959700
9 1 6 1
5.4 Definition of Cargo Handling Services as per Section
65(23) of the Finance Act, 1994 from time to time is as
follows:
Period 16.08.2002 to 15.05.2008
""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-containerized freight, services provided by a container
freight terminal or nay other freight terminal, for all modes
of transport and cargo handling services incidental to
freight, but does not include handling of export cargo or
passenger baggage or mere transportation of goods;"
From 16.05.2008 onwards
""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-containerized freight, services
provided by a container freight terminal or any other
freight terminal, for all modes of transport and cargo
handling services incidental to freight, with or without one
or more of other services like loading unloading, unpacking
12 ST/88538/2014
but does not include handling of export cargo or passenger
baggage or mere transportation of goods;"
5.5 From the definition itself it is quite evident that
during the period under dispute, cargo handling services
excluded
the handling of export cargo;
handling of passenger baggage;
mere transportation of goods.
Commissioner has allowed the benefit in respect of
handling of export cargo. While in respect of the import
cargo while appellants sought to deduct the value toward
the transportation of goods, the same was and allowed by
him. The reason as per the impugned order is that the
services provided are not mere transportation of goods but
is associated with the handling of import cargo. As per the
tender/ contract between the appellant and the service
recipient (M/s Central Warehousing Corporation (CWC))
the services provided by the appellants in respect of
import cargo are as follows:
"A. IMPORT OPERATIONS:
1. The contractor shall provide suitable types of road
vehicles in good working condition for transportation of
containers at JNPT/NSICT, Container Yard when required,
and take over the loaded containers placed on such road
vehicles by JNPT/NSICT operators after due inspection of
locks/seals and the condition of the container and on
completion of all other formalities including preparation of
EIR (Equipment Interchange Report). (Where a container
has been found damaged or with seals/locks tampered or
whose contents appear to have been damaged shall be
taken over from the JNPT/NSICT operators only after
following the procedure laid down).
On intimation about the arrival of containers at
JNPT/NSICT Yard after issue of a job order, the
13 ST/88538/2014
contractor shall make available the required number of
vehicles and shall arrange taking over of the containers
from the JNPT/NSICT and transport the same to
CFS/Multipurpose Warehousing Complex. Any
demurrage/wharfage that may occur on account of the
failure of the contractor to provide the vehicles. and
taking over the containers will be his liability. The
contractor shall provide transport facilities to the
customs officials, wherever, it becomes necessary to
move the container under custom escort. For providing
transport facilities for the custom escort, no extra
remuneration is payable to the contractor.
On reaching the CFS/Multipurpose Ware-
housing Complex, the contractor shall hand over the
container to the authorities duly satisfying the condition of
the seals, and locks of the container as shown in the
Equipment Interchange Report and arrange for immediate
de-stuffing of the container or after grounding, as the need
be, in the presence of customs, shipping lines/agents and
under the supervision of officials after following the
prescribed procedure at the designated point. The
container shall be de-stuffed within two clear working
shifts excluding the shift of arrival failing which the penalty
as deemed fit (minimum penal charges shall be equivalent
to one week grid charges as per the tariff of the Unit, for 5
grids per TEU) shall be imposed. The container shall be de-
stuffed in a manner which does not cause damage to the
container or its cargo and this operation shall be
performed to the satisfaction of the authorities. The cargo
de-stuffed at the Import Warehouse/Open Yard shall be
inventorised/segregated and neatly arranged
consignment-wise to tally with Ocean Bills Of Lading,
Import General Manifest, Packing List, Invoices and other
relevant documents. The empty container after de-stuffing
shall be shifted to the empty container yard or any other
location in the Multipurpose Warehousing Complex by
14 ST/88538/2014
suitable mechanical equipment and stacked up to three
high:
1(a) The contractor shall provide types of road vehicle in
good working condition for transportation of
containers at JNPT/NSICT, Container Yard when
required, and take over the loaded containers placed on
such road vehicles by JNPTINSICT operators after due
inspection of all locks/seals and the condition of the
container and on completion of all other formalities
including preparation of EIR (Equipment Interchange.
Report). (Where a container has been found damaged or
with seals/locks tampered or whose contents appear to
have been damaged shall be taken over from the
JNPTINSICT operators only after following the
procedure laid down).
On intimation about the arrival of containers at
JNPTINSICT Yard after issue of a Job Order, the
contractor shall make available the required number of
vehicles and shall arrange taking over of the containers
from the JNPTINSICT and transport the same to
Multipurpose Warehousing Complex. Any
demurrage/wharfage that may occur on account of the
failure of the contractor to provide the vehicles and taking
over the containers will be his liability. The
contractor shall provide transport facilities to the
customs officials, wherever, it becomes necessary to
move the container under custom escort, no extra
remuneration is payable to the contractor.
On reaching the Multipurpose Warehousing Complex,
the contractor shall hand over the container to the
Multipurpose Warehousing Complex authorities duly
satisfying the condition of the seals, and locks of the
container as shown in the Equipment Interchange Report
and arrange for immediate de-stuffing of the container or
15 ST/88538/2014
after grounding, as the need be, in the presence of
customs, shipping lines/agents and under the supervision
of Multipurpose Warehousing Complex officials after
following the prescribed procedure at the designated point.
The container shall be de-stuffed within two clear working
shins excluding the shift of arrival failing which the penalty
as deemed fit (minimum penal charges shall be equivalent
to one week grid charges as per the tariff of Multipurpose
Warehousing Complex, for 5 grids per TEU) shall be
imposed. The container shall be de-stuffed in a manner
which does not cause damage to the container or its cargo
and this operation shall be performed to the satisfaction of
the Multipurpose Warehousing Complex authorities. The
cargo de-stuffed at the Import Warehouse/Open Yard shall
be inventoried/segregated and neatly arranged
consignment-wise to tally with Ocean Bills Of Lading,
Import General Manifest. Packing List, Invoices and other
relevant documents. The empty container after de-stuffing
shall be shifted to the empty container yard or any other
location in the Container Freight Station by suitable
mechanical equipment and stacked up to three high. The
empty containers after de-stuffing shall be
shifted/transported to Multipurpose Warehousing Complex,
CWC, D'Node/any other empty container yard/any other
CFS within 10 KM radius from Multipurpose Warehousing
Complex. The transportation of empty containers shall be
completed within 24 hours of the date and time of issue of
Job Order, failing which the Regional Manager, CWC,
Container Freight Station, Jawaharlal Nehru Port, Navi
Mumbai shall have the right to impose the liquidated
damages on the contractors on TEU basis at the highest
slab of the ground rent as per tariff applicable to trade for
empty containers besides imposing the penalty of RS.200/-
per TEU per day on the contractor including the
consequential damages. The decision of the Regional
Manager, CWC, Container Freight Station, Jawaharlal
16 ST/88538/2014
Nehru Port, Navi Mumbai shall be final and binding on the
contractor in this regard.
2. The contractor shall provide suitable types of
road vehicles at JNPT/NSICT container yard as and
when required and take over loaded containers placed on
such road vehicles by INPT/NSICT operators, after due
inspection of locks/seals and the condition of the
container and on completion of all formalities including
preparation of Equipment Interchange Report (ElR),
and transportation to the Multipurpose Warehousing
Complex without delay. No container which has been
found damaged or with seals/or locks tampered or whose
contents appear to have been damaged shall be
taken over from the JNPT/NSICT operators, without
following the laid down procedure.· On reaching
Multipurpose Warehousing Complex, under instructions
from Multipurpose Warehousing Complex Regional
Manager,/Custom authorities, the contractor shall arrange
the grounding, wherever necessary, of the
import loaded containers from the road vehicles at the
required location within complex and stack these up to
three high by means of suitable equipment without
damaging the container or its contents.
The contractor shall complete the work of
transportation of import loaded containers within 24
hours of the date and time of issue of job order
irrespective of any detention due to offloading/loading
delays or traffic congestion en-route. The contractor shall
be required to transport a minimum of 100 TEUs (One
Hundred TEUs) of import loaded containers in a day from
the JNPT/NSICT Container Yard to the Multipurpose
Warehousing Complex, CWC, Sector-7, D. Node or the
number of container pending for movement which ever is
lower The Regional Manager, Jawaharlal Nehru Port, Navi
Mumbai reserves the right to impose a penalty, Rs.200/-
17 ST/88538/2014
per TEU/Per day including consequential damages on the
contractor plus ground rent of a loaded container on TEU
basis on the highest slab of the tariff applicable to the
trade against the quantity of such containers fall short of
the target of 100 TEUs in a day. The above target shall be
reviewed from time to time by the Regional Manager or his
authorised representative as per the business requirement
and enhancement in the target shall be made by the
Regional Manager at his sole discretion by giving one
month notice. The decision of the Regional Manager,
Jawaharlal Nehru Port, Navi Mumbai shall be final and
binding on the contractor in this regard. Nevertheless, the
payment shall be made on actual in case the volume of
work is less than 100 TEUS per day.
The contractor shall provide suitable type of road
vehicles and transport loaded containers between the and
Container Yard of JNPT/NSICT, on completion of all
formalities as and when required, with in a period of 24
hours of the date and time of issue of job order. Any delay
caused for such movement shall attract penal recovery as
mentioned above, which shall be final and binding on the
contractors in this regard.
3. The contractor shall arrange de-stuffing of the
loaded containers stacked in the open yard by grounding
these from any of the three heights, wherever necessary
for facilitating customs examination in the presence and
under supervision of customs officials, shipping
lines/agents and Central Warehousing Corporation
Officials, and stuffing if back in to the same or other
container and/or loading it on to the road vehicles of the
importer/CHA/SA provided at the Complex. The container
shall be de-stuffed in a manner which-does not cause
damage to the container or its cargo. and this operation
shall be performed to the satisfaction of the authorities.
The loaded/empty container, as the case may be, shall
18 ST/88538/2014
have to be stacked in the Container Yard of up to three
high. The contractor shall ensure deliveries/de-stuffing of
all the containers for which the issue slips are given for a
particular day failing which the penalty of Rs. 200/- per
TEU per day including the amount equivalent to
consequential damages shall be imposed by the Regional
Manager, Jawaharlal Nehru Port, Navi Mumbai. The
contractor shall also ensure that all the equipment
deployed by him remain in good working condition during
working shifts of the Multipurpose Warehousing Complex,
so that the transaction schedule for particular day are not
hampered. The decision of the Regional Manager, CFS,
Jawaharlal Nehru Port, Navi Mumbai shall be final and
binding on the contractor in this regard.
3(a) The contractor shall arrange de-stuffing of the
loaded containers stacked in the open yard by grounding
these from any of the three heights, wherever necessary,
for facilitating customs examination in the presence and
under supervision of customs officials, shipping
lines/agents and Central Warehousing Corporation
Officials, and stuffing it back in to the same or other
container and/or loading of the cargo on to the road
vehicles provided the importer/CHAISA provided at the
Multipurpose Warehousing Complex. The container shall be
de-stuffed in a manner which does not cause damage to
the container or its cargo and this operation
shall be performed to the satisfaction of the Container
Freight Station authorities. The loaded/empty container,
as the case may be, shall have to be stacked in the
Container Yard of Multipurpose Warehousing Complex up
to three high. The contractor shall ensure deliveries/de-
stuffing of all the containers for which the issue slips are
given for a particular day failing which the penalty of Rs.
200/- per TEU per day including the. amount equivalent to
consequential damages shall be imposed by the Regional
Manager, Container Freight Station, Jawaharlal Nehru Port,
19 ST/88538/2014
Navi Mumbai. The contractor, shall also ensure that all the
equipment deployed by him remain in good working
condition during working shifts of the CFS, so that the
transaction schedule for particular day are not hampered.
The decision of the Regional Manager, Container Freight
Station, Jawaharlal Nehru Port, Navi Mumbai shall be
final and binding on the contractor in this regard. The
empty containers after de-stuffing shall be
shifted/transported to Multipurpose Warehousing
Complex, CWC, D. Node, Sector-7/any other empty
container yard/any other CFS, within -10 KM radius from
Multipurpose Warehousing Complex. The transportation of
empty containers shall be completed within 24 hours of the
date & time of issue of job order, failing which the
Regional Manager, CWC, Container Freight Station,
Jawaharlal Nehru Port, Navi Mumbai shall have the right to
impose the liquidated damages on the contractors on TEU
basis at the highest slab of the ground rent as per tariff
applicable to trade for empty containers besides imposing
the penalty of Rs. 200/- per TEU per day on the contractor
including the consequential damages. The decision of the
Regional Manager, CWC, Container Freight Station,
Jawaharlal Nehru Port, Navi Mumbai shall be final and
binding on the contractor in this regard.
4. The contractor shall provide suitable types of
mechanical equipment for de-stuffing the container or
after grounding or after retrieval of loaded container
(which may include transportation within the complex)
as the need be, in the presence of customs, shipping
lines/agents and under the supervision of officials, after
following prescribed procedure. On completion of all
the laid down formalities, all the containers decided to
be de-stuffed shall be got de-stuffed immediately. The
contractor shall be responsible for any delay in getting
these containers de-stuffed. The Regional Manager,
Container Freight Station, Jawaharlal Nehru Port, Navi
20 ST/88538/2014
Mumbai reserves the right to impose penalty on the
contractors, as decided by him and his decision shall be
final and binding on the contractor in this regard. The
container shall be de-stuffed in a manner, which does not
cause damage to the containers or contents for which
contractor shall be solely responsible and liable to fully
compensate .the damages caused. The cargo de-stuffed
shall be inventoried /segregated and neatly arranged
consignment-wise in the nominated stack/grid, to tally
with the OBL/IGM/Packing List/Invoice and other relevant
documents. The cargo, thereafter shall be stacked in the
import cargo unit/open yard by using appropriate handling
equipment. The empty container after de-stuffing shall be
shifted to the Empty Container Yard or any other location
in the Complex and stacked up to three high.
4(a) The contractor shall provide suitable types of
mechanical equipment for de-stuffing the container or
after grounding or after retrieval of loaded container
(which may include transportation within the complex)
as the need he, in the presence of customs, shipping;
lines/agents and under the supervision of Multipurpose
Warehousing Complex officials, after following prescribed
procedure. On completion of all the laid
down formalities, all the containers decided to be de-
stuffed shall be got de-stuffed immediately. The contractor
shall be responsible for any delay in getting these
containers de-stuffed. The Regional Manager, Multipurpose
Warehousing Complex, Dronagiri Node, Sector-7, Navi
Mumbai reserves the right to impose penalty on the
contractors, as decided by him and his
decision shall be final and. binding on the contractor in this
regard. The container shall be de-stuffed in a manner,
which does not cause damage to the containers or
contents for which contractor shall be solely responsible
and liable to fully compensate the damages caused. The
cargo de-stuffed shall be inventoried/segregated and
21 ST/88538/2014
neatly arranged consignment-wise in the nominated
stack/grid, to tally with the OBL/IGM/Packing List/Invoice
and other relevant documents. The cargo, thereafter shall
be stacked in the import cargo unit/open yard by using
appropriate handling equipment. The empty container after
de-stuffing shall be shifted to the Empty Container Yard or
any other location in the Multipurpose Warehousing
Complex and stacked up to three high. The empty
containers after de-stuffing shall be shifted/transported to
Multipurpose Warehousing Complex CWC, D. Node, Sector-
7/any other empty container yard/any other CFS within 10
KM radius from Multipurpose Warehousing Complex. The
transportation of empty containers shall be completed
within 24 hours of the date & time of issue of job order,
failing which the Regional Manager, CWC, Container
Freight Station, Jawaharlal Nehru Port, Navi Mumbai shall
have the right to impose the liquidated damages on the
contractors on TEU basis at the highest slab of the ground
rent as per tariff applicable to trade for empty containers
besides imposing the penalty of Rs.200/- per TEU per day
on the contractor including the consequential damages.
The decision of the Regional Manager, CWC, Container
Freight Station, Jawaharlal Nehru Port, Navi Mumbai shall
be final and binding on the contractor in this regard."
From the, contract itself it is quite evident that, the
services provided and agreed to be provided cannot be
said to the services in respect of handling mere
transportation of goods. This is what has been held by the
Commissioner. We also find that the entire tender/contract
document nowhere bifurcates the amount paid by the
service recipient to the service provider into charges
towards mere transportation of goods and towards other
activities/ services provided by the appellant. During the
course of investigation and even thereafter M/s CWC failed
to give the breakup of the charges towards the "mere
transportation of goods" and those towards other services.
22 ST/88538/2014
In their reply to show cause notice appellants have
themselves stated as follows:
"8.1.2 Kind attention of your honour to the definition
of cargo handling services wherein it specifically excludes
the mere transportation of goods. Central Board of excise
and Customs vide its letter, issued under F No
B11/1/2002-TRU dated 1.08.2002, issue instructions an
clarification regarding tax on 10 new services issued by the
Finance Act, 2002, specifically clarified that there shall be
no levy of service tax on transport charges under cargo
handling services. Moreover at the time of negotiation of
rates with M/s CWC, M/s CWC had himself provided us
break up of transport charges and handling charges.
According which Rs 695/- is the transport cost and Rs
555/- is handling charges. According to the instructions of
M/s CWC, we have bifurcated the amount of transport and
handling charges. The necessary working of the transport
and handling cost is available with M/s CWC. We time and
again requested the officials of Ms/ CWC to provide us the
said break up but the failed to provide the same. Lastly, on
31.01.2014 (annexed as Annexure "H") we have made
written communication to Regional Manager, M/s CWC to
provide us the said break up but till date no positive
response received from the said entity and reminder was
issued to them on 21.01.2014 (annexed as Annexure -
"I"). However while issuing bills even though full mount is
charged to M/s CWC, but service tax is charged only on
the handling portion in the bill and on that basis we have
worked the amount of transport charges, during the period
under dispute and shown in the statement and necessary
Chartered Accountant Certificate is obtained. The said
certificate is already enclosed as Annexure "G". According
to which the transport element in the total amount worked
out to Rs 7,28,09,956/- during the period from October
2003 to December 2008. Moreover, the various officials of
M/s CWC, working at each level had passed the bills raised
23 ST/88538/2014
by us and no official had raised the objections on the bills
raised by us."
5.6 From the facts as stated above it is quite evident
that there is no breakup of charges towards transportation
of goods and other services available as part of contract
documents between the appellants and M/s CWC. It is also
evident that M/s CWC had not provided any breakup even
afterwards. What appellant claims is that there were
certain breakups agreed during the negotiations between
them and M/s CWC. But we find what so ever appellants
claim is not part of the agreement/ contract documents.
Then what is factual basis for claiming such breakup.
Commissioner has called this breakup as only presumptive
and we do not find any reason to differ with the same. In
case of Gajanand Agarwal [2009 (13) STR 138 (T-Kol)]
following has been held
"15. Combined reading of provisions of section
65(105)(zr) and 65(23) of the Act throw light that cargo
handling agencies are taxable entities. Cargo handling
service provided by such entities attract the levy of service
tax. Section 65(23) has a wide amplitude and has brought
all like nature activities to its fold expressly and by
inclusion of such like nature activities under the class
'cargo handling services'. However classification of service
under this category is subject to two
exceptions/exclusions: viz.,: (1) handling of export cargo
or passenger baggage and (2) mere transportation of
goods. These two activities are beyond the scope of such
class from taxation for rationale behind them. Accordingly,
cargo handling services provided in respect of domestic
cargo only are liable to tax. Event of levy arises when
service relating to or in relation to handling of cargo is
provided by a cargo handling agency irrespective of mode
of transport used for movement of such cargo. Precisely,
24 ST/88538/2014
following activities which are contemplated to be taxed as
cargo handling service are :
(1) By express terms :
(A) Loading, unloading, packing or unpacking of cargo;
(2) By inclusive terms :
(B) Handling service relating to cargo :
(i) Provided for freight in special containers or for non-
containerised freight;
(ii) Provided by a container freight terminal or, by any
other freight terminal; and
(3) Cargo handling service provided which is incidental
to freight.
16. What that appears to be necessity of law for taxation
under the class cargo handling service is that the service
provided should be relating to or in relation to cargo
handling by a cargo handling agency. The service provided
should be integrally or inseparably connected with handling
of cargo or attributable thereto without being a mere
activity of transportation of such cargo since transport
service independent of cargo handling is an exception
under the scheme of levy by Section 65(23) of the Act.
Thus it can be said that loading, unloading, packing or
unpacking of cargo and handling of cargo for freight in
special containers or non-containerized freight and service
provided by container freight terminal or other freight
terminal for all modes of transport are subject matter of
taxation under the class "cargo handling service". That
apart, any activity incidental to freight of cargo is also
liable to be taxed under such class. Mode of transport is
irrelevant for incidence of levy once the service provided
meets the test of handling of cargo in the manner
envisaged by law. It is also not necessary that the cargo
should only be meant for transport either by vessel in
ships or aircrafts."
25 ST/88538/2014
Further Tribunal has in case of J K Transport [2006 (2)
STR 3 (T-Del)] rejected the argument raised by the
appellant in respect of levy of service tax treating him as
an individual stating as follows:
"2. The only contention is of the appellants is that they
are not covered under the definition of Cargo Handling
Services in view of the Central Board of Excise and
Customs Circular F. No. B/1/2002-TRU, dated 1-8-2002.
We have gone through the Board Circular, which provides
as under :
"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,
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".
3. We find that the Board Circular provides that
individuals undertaking the activity of loading or unloading
of cargo in their individual capacity, are not covered under
the scope of Cargo Handling Services. In the present case
appellant is a proprietary firm and were engaged in the
contract of loading and unloading Blast furnace granulated
slag at the site of M/s. ACC Jamul Cement Works. In these
facts it cannot be said that the appellants is individual and
in individual capacity he is undertaking the activity of
loading and unloading of Cargo Handling Services.
Therefore, the reliance of the appellant on the Board
Circular dated 1-8-2002 is no help to them. Appeal is
dismissed."
In case of Gangadhar Bulk Movers Pvt Ltd [2012 (27) ST
258 (T-Mum)] tribunal held as follows:
26 ST/88538/2014
"6.2 Section 65(105)(zr) of the Act declared cargo
handling service to be "taxable service" w.e.f. 16-8-2002.
For better appreciation the relevant provisions are
extracted hereunder :
..........
A conjoint reading of provisions of Section 65(105)(zr) and 65(23) of the Act show that cargo handling agencies are taxable entities. Cargo handling services provided by such entities attract the levy of service tax. Section 65(23) has a wide amplitude and has brought all like nature activities to its fold expressly and by inclusion of such like nature activities under the class 'cargo handling services'. However classification of service under this category is subject to two exceptions/exclusions: viz. : (1) handling of export cargo or passenger baggage and (2) mere transportation of goods. These two activities are beyond the scope of such class from taxation for rationale behind them. Accordingly, cargo handling services provided in respect of domestic cargo only are liable to tax. Event of levy arises when service relating to or in relation to handling of cargo is provided by a cargo handling agency irrespective of mode of transport used for movement of such cargo. Precisely, following activities which are contemplated to be taxed as cargo handling service are :
(1) By express terms : (A) Loading, unloading, packing or unpacking of cargo; (2) By inclusive terms : (B) Handling service relating to cargo : (i) Provided for freight in special containers or for non- containerised freight;
(ii) Provided by a container freight terminal or, by any other freight terminal; and (3) Cargo handling service provided which is incidental to freight.
27 ST/88538/2014 From the above it follows that necessity of law for taxation under the class cargo handling service is that the service provided should be relating to or in relation to cargo handling by a cargo handling agency. The service provided should be integrally or inseparably connected with handling of cargo or attributable thereto without being a mere activity of transportation of such cargo since transport service independent of cargo handling is an exception under the scheme of levy by Section 65(23) of the Act. Thus it can be said that loading, unloading, packing or unpacking of cargo and handling of cargo for freight in special containers or non-containerized freight and service provided by container freight terminal or other freight terminal for all modes of transport are subject matter of taxation under the class "cargo handling service". That apart, any activity incidental to freight of cargo is also liable to be taxed under such class. Mode of transport is irrelevant for incidence of levy once the service provided meets the test of handling of cargo in the manner envisaged by law. It is also not necessary that the cargo should only be meant for transport either by vessel in ships or aircrafts."
5.7 Also we are not in position to agree with the submissions made by the appellants in respect of liability of sub contractor to pay service tax when the service tax is paid by the main contractor. This issue is no longer res integra and has been decided by CESTAT in case of Sunil Hi Tech Engineers [2014 (36) STR 408 (T-Mum)] as follows:
"7.3 With regard to the question of the liability of sub- contractor to pay service tax when the main contractor has discharged the tax liability, this very same issue was considered by a larger bench of this Tribunal in the case Vijay Sharma & Co. [2010 (20) S.T.R. 309 (Tri.-LB)]. In the said case, it was held that -
28 ST/88538/2014 "The scheme of service tax law suggests that it is a single point tax law without being a multiple taxation legislation. In the absence of any statutory provision to the contrary, providing of service being event of levy, self-same service provided shall not be doubly taxable. If service tax is paid by a sub-broker in respect of same taxable service provided by the stock broker, the stock broker is entitled to the credit of the tax so paid on such service if entire chain of identity of sub-broker and stock broker is established and transactions are provided to be one and the same...."
This decision was followed by another co-ordinate bench of this Tribunal in SEW Construction Ltd. case [2011 (22) S.T.R. 666 (Tri.-Del.)] wherein it was held that -
"We do not find any provision in the Finance Act, 1994 to grant immunity to the sub-contractor from levy of service tax when undisputedly taxable services were provided by them. ......"
Therefore, the argument that since the main contractor has discharged the service tax and therefore, the sub- contractor need not pay service tax is without any legal basis and is quite contrary to the concept and practice, of Cenvat credit scheme. The Larger Bench prevails over the other decisions of the Tribunal in this regard. Accordingly, we reject this contention raised by the appellant in toto."
5.8 In para 9.3 of Show Cause Notice wherein the statement dated 26.11.2018 of Shri Jainendra Jha, Executive Director & Authorized Signatory of Appellants is discussed following is stated:
"On perusal of the above mentioned amounts as per ST-3 returns filed by them and the amount of billing as per data furnished by CWC, he agreed there was a vast difference between the two figures; that he was shown invoices raised by M/s Pearl Logistics on CWC in connection with services rendered under "Cargo Handling".
29 ST/88538/2014 S Bill No/ Date Gross Service Tax (Rs) No Amount (Rs) 1 PLS/CWC/12/04-05 Dt 4,48,683 45,766 01.01.04 2 PLS/CWC/13/04-05 Dt 2,05,33,318 2,09,438 01.10.04 3 PLS/CWC/15/04-05 Dt 16,10,274 94,535 16.10.04 4 PLS/CWC/28/04-05 Dt 1,85,55,645 No ST Charged 17.01.05 5 PLS/CWC/30/04-05 Dt 20,96,962 No ST Charged 01.02.05 6 PLS/CWC/34/04-05 Dt 16,05,622 94,843 28.02.05 7 PLS/CWC/04/04-05 Dt 60,360 6,157 28.02.05 That on perusal of the same he agreed that ST was charged by them in the bills dated 01.04.04, 16.10.04 and 28.02.05 raised on CWC, that however, no ST was charged by them in the bills raised on 17.01.05 and 01.02.05; that on being asked about the reason for the practice of charging ST in certain bills and not charging ST in certain bills in the intervening period he stated that it remained to be charged erroneously....."
5.9 He had further in his statement dated 09.01.09 stated "On being asked about the payment of service tax during the said period, specifically about the period during which the service tax was collected but not deposited with the Government Account and whether ST-3 returns had been filed for the above period he deposed that in respect of M/s Pearl Logistics Services, they had paid service tax from October 05 to March 07 and ST-3 returns were filed for the said period after due dates; that the above payments and filling of ST-3 returns were done subsequent to visit of the officers of DGCEI, Mumbai in November'06; that as regards to payment of service tax for the period from April 07 to Sepetmeber'08 in respect of the above 30 ST/88538/2014 two companies, he stated that they had not paid the service tax and had not filed the ST-3 returns for the said period; on being asked, he stated that during the period April 07 to September 08 though they had collected appropriate service tax from their customers they could not deposit in the Government account for which he had no comments offer at this juncture; that as regards the data and copies of ST-3 returns as called for vide Summons dated 06.01.09, he stated that since they had not filed the ST-3 returns they could not produce the same....."
5.10 From the facts as stated above it is quite evident that appellants were charging the service tax from their customer and not depositing the same with the government. They were also not filing the Service Tax returns even after knowing about their liability for the same. Thus in our view extended period of limitation is applicable in the facts and circumstances of this case. In case of Capital Transport Convoy Contractor [2016 (41) STR 651 (T-Del)], tribunal has in similar circumstances held as follows:
"9. The appellant has contended that extended period cannot be invoked in respect of impugned order in appeal dated 25-2-2013 as the said order was in respect of show cause notice demanding Service Tax on same activity for subsequent period and cited the Supreme Court judgment in the case of Nizam Sugar Factory to support this proposition. While on the face of it there seems to be some traction in this contention, on closer examination we find that Revenue sought information with regard to services rendered for the period January, 2008 to September, 2008 vide letter dated 26-11-2008. It was followed by reminders dated 14-1-2009, 26-2-2009, 2-3-2009, 12-3-2009 and 26-3-2009. The appellant sent reply dated 9-4-2009 vide which it merely forwarded ST-3 return for the period April, 31 ST/88538/2014 2008 to September, 2008 which too was incomplete. Revenue again reminded for supply of information vide letter dated 16-4-2009 followed by reminder dated 6-5- 2009, in response to which vide letter dated 18-5-2009 it provided figures of gross amount received only for the period January, 2008, February, 2008 and March, 2008 without mentioning the amount of Service Tax leviable or paid. This behaviour of the appellant manifestly shows suppression of facts on its part as it did not provide the requisite information required for computing Service Tax liability for issuing show cause notice in spite of numerous reminders over a period of several months. Therefore, the judgment of Supreme Court in Nizam Sugar Factory (supra) is not applicable in the present case as that judgment was in relation to central excise duty involving manufacture of sugar in a factory where identical issue and facts were in the knowledge of Revenue for issuance of the subsequent show cause notice while in the present case the facts relating to the value of services rendered during the period January, 2008 and September, 2008 were not available with Revenue and the appellant deliberately did not provide them in a timely manner in spite of repeated and numerous reminders sent over a period of several months. Thus the ratio of the judgment in the case of Nizam sugar Factory (supra) is not applicable here. Once suppression is established as it has been in the present case, Revenue gets a period of 5 years to issue show cause notice as per the proviso to Section 73(1) ibid.
Therefore, the contention of the appellant that demand is time-barred in respect of the impugned order in appeal dated 25-2-2013 is not sustainable."
Same view has been expressed by the tribunal in case of Star India Pvt Ltd [2015 (38) STR 884 (T-Mum)] "5.15 The next issue for consideration is the time-bar aspect. The contention of the appellant since is that they 32 ST/88538/2014 were only required to declare the consideration received in the ST-3 return and in the case of foreign advertisers the consideration was paid directly to Star Hong Kong, there cannot be any misdeclaration on their part. This contention is obviously wrong. In the ST-3 return, there was a column wherein the appellant was required to declare the amount charged to the service recipient, apart from the amount received. As per the agreement, dated 1-4-1999, SIPL was appointed as non-exclusive independent representative in the territory of India to solicit television advertising for the channels, namely, Channel V, Star World, Star Plus, Star News, Star Movies and such other channels as may be added in future and to collect and remit advertisement charges. The responsibility also included delivery of the invoices to the advertisers on a timely basis. Thus the appellant obviously knew the amount charged for the broadcasting services. Section 70 of the Finance Act, 1994, mandated that - "Every person liable to pay the Service Tax shall himself assess the tax due on the services provided by him and shall furnish to the Superintendent of Central Excise, a return in such form and in such manner and at such frequency as may be prescribed." Thus the appellant was operating under self-assessment procedure during the impugned period. The appellant has failed to declare in the said return the complete particulars with regard to the services rendered to the foreign advertisers. Therefore, the ratio of the decision of the Hon'ble Apex Court in the case of Madras Petrochem Ltd. (supra) relied upon by Revenue would squarely apply. In the said decision, the Hon'ble Apex Court had held as follows :-
"14. The proposition of law as laid down is not in dispute. We find in the present case as aforesaid, a clear finding was recorded that the petitioner was aware and was obliged to file RG 1 Register, gate passes and also of clearances in the RT 12 returns by disclosing the particulars which was not done in the present case. The
33 ST/88538/2014 finding recorded in this case, especially in the background that this was a case of self-removal procedure in which there is obligation cast on the assessee to make proper and correct declaration and entries in the production register RG 1. Further finding was that it was not by inadvertence. There could be no other inference if it was not by inadvertence, then deliberate, then it is not in the realm of inaction of the assessee but with the objective of a gain, which in other words would be conscious withholding of the information. Thus unhesitantly we conclude, on the facts of this case, proviso to Section 11 would be applicable, hence, show cause notice is held to be within time."
Applying the above ratio to the facts of the case before us, the invocation of extended period of time to confirm the tax demand cannot be faulted at all and we hold accordingly. The Hon'ble High Court of Gujarat in Salasar Dyeing & Printing Mills (P) Ltd. v. C.C.E. & C., Surat-I - 2013 (290) E.L.T. 322 (Guj.) has held that -
"15. Upon reading the relevant provisions contained in Section 11A of the Act, it becomes clear that in case of duty which has not been levied or paid, or has been short- levied or short-paid or erroneously refunded by reason of fraud, collusion, wilful misstatement, suppression of facts, etc., period of service of notice on the person chargeable with such duty would be five years instead of one year provided in normal circumstances. Nowhere does this provision refer to the period of service of notice after fraud, collusion, wilful misstatement or suppression, etc., comes to the knowledge of the Department. In simple terms, the Department could recover unpaid duty up to a period of five years anterior to the date of service of notice when the case falls under proviso to sub-section (1) and such omission is on account of fraud, collusion, wilful misstatement, etc."
34 ST/88538/2014 Thus in our considered view, the invocation of extended period of time for confirmation of demand is fully justified and we hold accordingly."
Hence we uphold the impugned order for invoking extended period of limitation.
5.11 Since the demand of tax has been upheld the demand for interest will follow. It is now settled law that interest under Section 75, is for delay in the payment of tax from the date when it was due. Since appellants have failed to pay the said Service Tax by the due date interest demanded cannot be faulted. In case of P V Vikhe Patil SSK [2007 (215) ELT 23 (Bom)] Hon'ble Bombay High Court has stated as follows:
"10. So far as interest u/s. 11AB is concerned, on reference to text of Section 11AB, it is evident that there is no discretion regarding the rate of interest. Language of Section 11AB(1) is clear. The interest has to be at the rate not below 10% and not exceeding 36% p.a. The actual rate of interest applicable from time to time by fluctuations between 10% to 36% is as determined by the Central Government by notification in the Official Gazette from time to time. There would be discretion, if at all the same is incorporated in such notification in the gazette by which rates of interest chargeable u/s. 11AB are declared.
The second aspect would be whether there is any discretion not to charge the interest u/s. 11AB at all and we are afraid, language of Section 11AB is unambiguous. The person, who is liable to pay duty short levied/short paid/non-levied/unpaid etc., is liable to pay interest at the rate as may be determined by the Central Government from time to time. This is evident from the opening part of sub-section (1) of Section 11, which runs thus :
"Where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded, the person, who is liable to pay duty as 35 ST/88538/2014 determined under sub-section (2) or has paid the duty under sub-section (2B) of Section 11A, shall in addition to the duty be liable to pay interest at such rate ........"
The terminal part in the quotation above, which is couched with the words "shall" and "be liable" clearly indicates that there is no option. As discussed earlier, this is a civil liability of the assessee, who has retained the amount of public exchequer with himself and which ought to have gone in the pockets of the Central Government much earlier. Upon reading Section 11AB together with Sections 11A and 11AA, we are of firm view that interest on the duty evaded is payable and the same is compulsory and even though the evasion of duty is not mala fide or intentional."
Similar views have been expressed in the following decisions:
a) Kanhai Ram Thakedar [2005 (185) ELT 3 (SC)]
b) TCP Limited [2006 (1) STR 134 (T-Ahd)]
c) Pepsi Cola Marketing Co [2007 (8) STR 246 (T-Ahd)]
d) Ballarpur Industries Limited [2007 (5) STR 197 (T-
Mum)] Thus we uphold the demand of interest made under Section 75 of the Finance Act, 1994.
5.12 It is now settled position in law that penalty under section 78 can be imposed only if the ingredients specified in the said section are present. The ingredients specified for invoking the Section 78 are identical to those specified for invoking the extended period of limitation as provided by Section 73 ibid. Since in respect of show cause notice, we hold that demand could have been made by invoking the extended period of limitation as provided by Section 73, we uphold the penalties imposed under Section 78 of The Finance Act, 1994. Hon'ble Supreme Court has in case 36 ST/88538/2014 of Rajasthan Spinning and Weaving Mills [2009 (238) ELT 3 (SC)] held as follows:
"23. The decision in Dharamendra Textile must, therefore, be understood to mean that though the application of Section 11AC would depend upon the existence or otherwise of the conditions expressly stated in the section, once the section is applicable in a case the concerned authority would have no discretion in quantifying the amount and penalty must be imposed equal to the duty determined under sub-section (2) of Section 11A. That is what Dharamendra Textile decides."
5.13 In view of various decisions of High Court/ Tribunal holding that penalty under Section 76 and 78 can be imposed simultaneously till the amendment of Section 78, with effect from 16.05.2008, we uphold the penalties imposed by the Commissioner, upto 16.05.2008. Commissioner has himself not imposed any penalty after that date under Section 76 as second proviso to Section 78 specifically read as follows:
"Provided also that if the penalty is payable under this section, the provisions of section 76 shall not apply."
5.14 Penalties under Section 76 and 77 of Finance Act, 1994 are in nature of civil penalties and are imposed in cases where the person who by his act of omission or commission has failed to fulfill the obligations cast on him under the statue. Hon'ble Supreme Court has in case of Gujarat Travancore Agency [1989 (42) ELT 350 (SC)] held as follows:
"4. Learned Counsel for the assessee has addressed an exhaustive argument before us on the question whether a penalty imposed under Section 271(1)(a) of the Act involves the element of mens rea and in support of his submission that it does he has placed before us several cases decided by this Court and the High Courts in order to demonstrate that the proceedings by way of penalty under 37 ST/88538/2014 Section 271(1)(a) of the Act are quasi criminal in nature and that, therefore, the element of mens rea is a mandatory requirement before a penalty can be imposed under Section 271(1)(a). We are relieved of the necessity of referring to all those decisions. Indeed, many of them were considered by the High Court and are referred to in the judgment under appeal. It is sufficient for us to refer to Section 271(1)(a), which provides that a penalty may be imposed if the Income Tax Officer is satisfied that any person has without reasonable cause failed to furnish the return of total income, and to Section 276C which provides that if a person wilfully fails to furnish in due time the return of income required under Section 139(1), he shall be punishable with rigorous imprisonment for a term which may extend to one year or with fine. It is clear that in the former case what it intended is a civil obligation while in the latter what is imposed is a criminal sentence. There can be no dispute that having regard to the provisions of Section 276C, which speaks of wilful failure on the part of the defaulter and taking into consideration the nature of the penalty, which is punitive, no sentence can be imposed under that provision unless the element of mensrea is established. In most cases of criminal liability, the intention of the Legislature is that the penalty should serve as a deterrent. The creation of an offence by Statute proceeds on the assumption that society suffers injury by and the act or omission of the defaulter and that a deterrent must be imposed to discourage the repetition of the offence. In the case of a proceeding under Section 271(1)(a), however, it seems that the intention of the legislature is to emphasise the fact of loss of Revenue and to provide a remedy for such loss, although no doubt an element of coercion is present in the penalty. In this connection the terms in which the penalty falls to be measured is significant. Unless there is something in the language of the statute indicating the need to establish the 38 ST/88538/2014 element of mens rea it is generally sufficient to prove that a default in complying with the statute has occurred. In our opinion, there is nothing in Section 271(1)(a) which requires that mens rea must be proved before penalty can be levied under that provision. We are supported by the statement in Corpus Juris Secundum Volume 85, page 580, Paragraph 1023 :
"A penalty imposed for a tax delinquency is a civil obligation, remedial and coercive in its nature, and is far different from the penalty for a crime or a fine or forfeiture provided as punishment for the violation of criminal or penal laws."
5. Accordingly, we hold that the element of mensrea was not required to be proved in the proceedings taken by the Income Tax Officer under Section 271(1)(a) of the Income-tax Act against the assessee for the assessment years 1965-66 and 1966-67."
In Chairman, SEBI v. Shriram Mutual Fund [2006-TI0L-72- SC-SEBI] the Hon'ble Apex Court held that mensrea is not an essential element for imposing penalty for breach of civil obligations.
'A penalty imposed for a tax delinquency is a civil obligation, remedial and coercive in its nature, and is far different from the penalty for a crime or a fine or forfeiture provided as punishment for the violation of criminal or penal laws.' 5.15 Penalty under Section 76 of the Act is imposed for failure to pay Service Tax by the due date. Kerala High Court has in case of Krishna Poduval {2006 (1) STR 185 (Ker)] held follows:
"11. The penalty imposable under S. 76 is for failure to pay service tax by the person liable to pay the same in accordance with the provisions of S. 68 and the Rules made thereunder, whereas S. 78 relates to penalty for 39 ST/88538/2014 suppression of the value of taxable service. Of course these two offences may arise in the course of the same transaction, or from the same act of the person concerned. But we are of opinion that the incidents of imposition of penalty are distinct and separate and even if the offences are committed in the course of same transaction or arises out of the same act, the penalty is imposable for ingredients of both the offences. There can be a situation where even without suppressing value of taxable service, the person liable to pay service tax fails to pay. Therefore, penalty can certainly be imposed on erring persons under both the above Sections, especially since the ingredients of the two offences are distinct and separate. Perhaps invoking powers under S. 80 of the Finance Act, the appropriate authority could have decided not to impose penalty on the assessee if the assessee proved that there was reasonable cause for the said failure in respect of one or both of the offences. However, no circumstances are either pleaded or proved for invocation of the said Section also. In any event we are not satisfied that an assessee who is guilty of suppression deserves such sympathy. As such, we are of opinion that the learned Single Judge was not correct in directing the 1st appellant to modify the demand withdrawing penalty under S. 76. Therefore, the judgment of the learned Single Judge, to the extent it directs the first appellant to modify Ext. P1 by withdrawing penalty levied under S. 76, is liable to be set aside and we do so. The cumulative result of the above findings would be that the Writ Petitions are liable to be dismissed and we do so. However, we do not make any order as to costs."
Same view was again expressed by Kerala High Court in case of Lawson Travel and Tours (I)(P) Ltd [2015 (37) ELT 183 (Ker)] as follows:
"5. What we notice is, the liability to pay Service Tax is in accordance with the Finance Act, 1994, as the taxable 40 ST/88538/2014 services involved in the matter was for the period from April, 2000 to March, 2004. The decision of this High Court referred above in Krishna Poduval's case (supra) was also prior to Finance Act, 2008, which made a remarkable distinction between Sections 76 and 78 of Service Tax Act. As the period in question relates prior to Finance Act, 2008, the assessing authority and later the Tribunal were justified in placing reliance on Krishna Poduval's case (supra) by the High Court of Kerala.
6. We find no good reason to opine that both Sections 76 and 78 are not applicable to the case of the appellant. On the other hand, we find, at the relevant point of time prior to Finance Act, 2008, penalty could be imposed under both the provisions and it is for appellant/assessee to convince authorities concerned by evidence that they are not liable to pay Service Tax and that there is justification in the defence raised by them regarding refund of the amounts. Accordingly, the appeal is dismissed."
Tribunal has in case of Checkmate Industries Services [2016 (44) STR 290 (T-Mum)]] held as follows:
"5.4With regard to penalties imposed on the appellant, penalty under Section 76 is imposed for default in payment of tax and, no mensrea is required to be proved for imposing such penalty. For mere default and delay in payment of tax, the liability to penalty arises. The Hon'ble High Court of Kerala in the case of Asst. Commissioner of Central Excise v. Krishna Poduval - 2006 (1) S.T.R. 185 (Ker.) has held that penalty under Section 76 of the Finance Act, 1994 can be imposed for mere default/delay in payment of Service Tax in addition to the penalty under Section 78 and these penalties are mutually exclusive and even if offences are committed in the course of same transaction or arise out of same act, penalty is imposable for ingredients of both offences."
41 ST/88538/2014 5.16 By not taking registration, paying the service tax by due date and not filing ST-3 returns by the due date appellants have contravened the provisions of Section 68, 69 & 70 of Finance Act, 1994 read with Rule 4,5,6 & 7 of Service Tax Rules, 1994. Thus appellants have made themselves liable to penalty under Section 77 ibid. Hence the penalties imposed upon by the adjudicating authority under this section are upheld.
6.1 In view of discussions as above we do not find any merits in the appeal filed by the appellants and dismiss the same.
(Order pronounced in the open court on 05.08.2019) (S.K. Mohanty) Member (Judicial) (Sanjiv Srivastava) Member (Technical) tvu