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2011 (12) TMI 205 - AT - Service TaxCargo handling services - section 65(105)(zr) of Finance Act,1994 assessee engaged in hiring out payloaders to SECL and for loading of coal into the wagons at railway siding argument of the Appellants that they were in the business of just hiring out pay loaders - Held that - Work order clearly shows that assessee s work was to load coal into the railway wagons. The compensation given to them was also based on per ton of coal loaded and not based on number of pay loaders given. At the stage of loading of cargo into railway wagons there can be no doubt that the goods are cargo. Thus not able to agree with the contention that if any mechanized means is employed there is no handling of cargo. Therefore, the work done by the appellant was cargo handling. See Gajanand Agarwal v. CCE&C 2008 (6) TMI 163 - CESTAT KOLKATA Suppression with intention to evade payment of tax cannot be alleged in this case in view of the confusion in law in this matter prevalent during the time and therefore demand for the normal period of one year only can be sustained in this case and penalties u/s 80 of Finance Act, 1994 are waived. See Vishal Traders v. CCE 2009 (11) TMI 137 - CESTAT, NEW DELHI Further, in this type case of cases where the service provider has not been able to realise service tax separately from the person availing service, the Tribunal has been holding that the value realised should be considered as cum-tax value. See CCE&C v. Advantage Media Consultant 2008 (3) TMI 59 - CESTAT KOLKATA upheld by Apex Court 2008 (10) TMI 570 - SUPREME COURT Decided partly in favor of assessee.
Issues Involved:
1. Whether the services rendered by the Appellant to SECL were covered under "cargo handling services" as per section 65(105)(zr) of the Finance Act, 1994. 2. Whether the Show Cause Notice (SCN) issued on 16-11-2006 is time-barred. Issue-wise Detailed Analysis: 1. Coverage under "Cargo Handling Services": - Nature of Service: The Appellant entered into an agreement with SECL for hiring out payloaders and loading coal into railway wagons. The dispute was whether this activity fell under "cargo handling services" as defined in section 65(23) of the Finance Act, 1994. - Appellant's Arguments: - The contract was for hiring payloaders, not for cargo handling. - The drivers were under SECL's instructions, implying SECL employees were responsible for loading. - The payment per ton does not define the nature of the activity. - The service was for supplying tangible goods without transferring possession, which was taxable only from 16-05-2008. - They did not perform loading, unloading, packing, or unpacking, hence were not a "Cargo Handling Agency". - Only specific agencies like Container Corporation of India can be considered "Cargo Handling Agencies". - Mechanized loading should not be considered as cargo handling. - Respondent's Arguments: - The contract was for loading coal into railway wagons, not merely hiring payloaders. - The rate was based on the quantity of coal loaded, not on the number of payloaders. - SECL did not have the equipment or manpower, thus the Appellant was performing the activity. - Tribunal's Findings: - The work order indicated the Appellant's role was to load coal into railway wagons, and compensation was per ton loaded. - Supervision by SECL does not mean SECL was performing the activity. - Mechanized means do not exclude an activity from being cargo handling. - An individual can be considered a "cargo handling agency" as per the dictionary definition of "agency". 2. Time-barred Show Cause Notice (SCN): - Appellant's Arguments: - No suppression of information with intent to evade tax. - Bona fide belief that the activity was not taxable. - Confusion in law and correspondence from the Ministry of Coal indicated a lack of clarity. - The demand should be time-barred as per the Tribunal's decisions in similar cases. - Respondent's Arguments: - The Appellant did not register under service tax laws, disclose relevant information, or discharge tax liability, indicating suppression. - Tribunal's Findings: - There was confusion in law regarding the scope of "cargo handling service". - The extended period for demand could not be invoked due to the lack of intent to evade tax. - Only the demand for the normal period of one year is sustainable. - Penalties should be waived under section 80 of the Finance Act, 1994, due to the absence of suppression with intent to evade tax. Conclusion and Directions: - The Tribunal concluded that the services rendered by the Appellant were indeed "cargo handling services". - The demand for tax is limited to the normal period of one year due to the confusion in law and lack of intent to evade tax. - Penalties are waived, and the value realized should be considered as cum-tax value. - The appeal is partially allowed.
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