2013 (10) TMI 1440 - AT - Service Tax

Cargo Handling Service - appellant contest that activity of packing, unpacking, loading and handling goods within the factory premises will not be covered by the entry for Cargo Handling Services because at that stage where such activity was being done they were just handling goods and not cargo - extended period of limitation - penalty - difference of opinion - majority order. Held that - reference is returned to the original Bench directing the Registry to place the same before that Bench for majority order.

Summary

Issues Involved:
1. Classification of services provided by the appellants.
2. Applicability of Service Tax under 'Cargo Handling Services'.
3. Invocation of extended period of limitation.
4. Imposition of penalties under various sections of the Finance Act, 1994.

Detailed Analysis:

1. Classification of Services Provided by the Appellants:
The appellants were providing services to CFCL during the period from August 2002 to July 2004, which included various activities such as bagging, loading, unloading, and handling urea products within the factory premises. The Revenue contended that these services fell under 'Cargo Handling Services' as defined in the Finance Act, 1994, and demanded Service Tax. The appellants argued that they were merely supplying manpower for these activities and relied on decisions like S.B. Construction Company v. Union of India and J & J Enterprises v. CCE, Raipur, which held that handling goods within a factory does not amount to 'Cargo Handling Services'.

2. Applicability of Service Tax under 'Cargo Handling Services':
The Tribunal noted that handling of goods within a factory does not amount to 'Cargo Handling Services'. However, the activities listed in the contract, such as loading cargo into rail wagons and trucks, clearly involved cargo handling. The Tribunal concluded that the appellants' argument of merely supplying manpower was not tenable, as the contract specified services related to cargo handling.

3. Invocation of Extended Period of Limitation:
The appellants contended that the demand was time-barred, arguing that they were under a bona fide belief that their activities were not taxable. They relied on decisions like Pahwa Chemicals Private Limited v. CCE, Delhi, and CCE v. Chemphar Drugs and Chemicals, which held that mere non-declaration does not amount to suppression. The Tribunal, however, held that the appellants' failure to register and disclose their activities amounted to suppression with intent to evade tax, justifying the invocation of the extended period of limitation.

4. Imposition of Penalties:
The Tribunal upheld the imposition of penalties under Section 78 of the Finance Act, 1994, but allowed the appellants the option to pay 25% of the tax amount as penalty within 30 days. Penalties under Sections 75A and 76 were set aside, while the penalty under Section 77 was upheld.

Separate Judgments:
- Member (Technical): Held that the services provided by the appellants were taxable under 'Cargo Handling Services' and justified the invocation of the extended period of limitation. Penalties were imposed with the option to pay a reduced penalty within 30 days.
- Member (Judicial): Differed, arguing that the matter should be remanded for reconsideration on merits and limitation, as the lower authorities did not adequately address the appellants' arguments and the applicability of relevant circulars and decisions.
- Third Member (Judicial): Agreed with the Member (Technical), concluding that the appeals should be rejected on merit, the extended period of limitation was justified, and penalties were to be imposed as directed.

Final Order:
- Appeals rejected on merit.
- Invocation of the extended period of limitation justified.
- Penalty under Section 78 upheld with the option to pay 25% within 30 days.
- Penalties under Sections 75A and 76 set aside; penalty under Section 77 upheld.