2014 (6) TMI 132 - AT - Service Tax

Waiver of pre deposit - mining of coal service - Cargo handling service - Held that - to attract levy of Service Tax for cargo handling, the service provider has to be a cargo handling agency which is to say the main business must be cargo handling. We are also of the view that the nature of the contract also has to be considered to come to the conclusion whether the service attracts levy of Service Tax or not. In this case the nature of transaction apparently is one of sale. It was vehemently argued by the learned Commissioner (AR) that in this case the service has to be segregated and it is a divisible contract. This according to him is because Silo charges are collected because of a different Notification of Govt. of India. Even though we find some force in this argument, because of the definition of the service and service provider which we have discussed above, we feel that whether consideration of these arguments would affect the main clause or not would also require an in depth consideration and detailed analysis. Further in view of the complex issues involved when the legal aspects which we have discussed above, the Appellant also has a strong case as regards limitation - Prima facie case in favour of assessee - Stay granted.

Summary

Issues:
Service Tax liability on Silo Charges collected by the Appellant during the sale of coal.

Analysis:
The Appellant, engaged in coal mining, collected Silo Charges for rapid mechanical loading of goods. The Revenue contended that Service Tax was applicable on these charges, leading to the confirmation of the Service Tax demand for the period from April 2003 to June 2009, along with penalties and interest.

The Appellant argued that the Silo Charges were part of the sale price and not a separate service, as the property passed only upon loading. They contended that since they were not a cargo handling agency, the Service Tax was not applicable. The Appellant also highlighted that they rectified the income declaration for Silo Charges and included them in the sale price post-2007, along with excise duty payment, making it a sale of coal with incidental service.

The Commissioner argued that the Appellant deliberately misstated facts by separately invoicing Silo Charges and paying sales tax only after the adjudication order in 2009. The Commissioner claimed that the separate invoicing indicated a divisible contract, and the Silo Charges were for a special cargo handling service, attracting Service Tax.

The Tribunal found the issue complex, requiring detailed consideration of the contract terms, accounting nature, and legal precedents. They observed that for Service Tax on cargo handling to apply, the service provider must be a cargo handling agency, which the Appellant was not. The Tribunal noted the sale nature of the transaction and the need for in-depth analysis of the legal aspects and contract nature. Due to the complexity and the Appellant's strong case for limitation, the Tribunal ruled in favor of the Appellant, granting a stay on pre-deposit and recovery of dues during the appeal process.