2015 (6) TMI 20 - AT - Service Tax

Demand of service tax - Cargo Handling Services - Held that - Mined coal at pit-heads required to be transported to stockyards or crushing sites from the mine area can be certainly considered as cargo. Therefore, the activity undertaken by the appellant clearly falls within the definition of Cargo Handling Service as defined in law. - The Hon ble High Court of Orissa in the case of Coal Carriers (2011 (2) TMI 1140 - ORISSA HIGH COURT) held that loading of coal into the railway wagons would fall within the definition of Cargo Handling Service . The Hon ble High Court also observed that as per the dictionary meaning the goods which are being carried or transported by any means of transportation and has become load of the trucks would also come within the meaning of cargo and therefore, the activity was squarely covered by Cargo Handling Service as defined in law. In this view of the matter, we are of the view that the activity undertaken by the appellant squarely falls within the scope of Cargo Handling Service as defined in law. - same relates to mining of sand from the riverbed and transporting the same to the Western Coalfield s mining area. Sand is a minor mineral and therefore, mining of sand from riverbed comes within the definition of mining service and will not come within the scope of Cargo Handing Service as the main activities is of mining and therefore, demand of Service Tax on mining of sand is not sustainable in law. Activity of loading/unloading of coal by engaging tippers would come within the purview of the Cargo Handling Service and the appellant would be liable to discharge Service Tax liability accordingly. As regards the mining of sand from the riverbed the said activity would come within the scope of mining service and not under Cargo Handling Service . Since there was a confusion about the scope of levy, the extended period of time is not invocable in the present case and accordingly, the demand should be restricted to the normal period of limitation. The appellant would be liable to pay interest on the Service Tax demand payable for the normal period of limitation. Since the dispute relates to the classification of service, imposition of penalties are not warranted. Therefore, the matter is remanded to the adjudicating authority only for the limited purpose of quantification of the Service Tax demand for the normal period of limitation and for excluding the sand mining activity undertaken from the scope of Cargo Handling Service. - Decided partly in favour of assessee.

Summary

Issues Involved:
Service Tax demand on "Cargo Handling Services" rendered by the appellant during a specific period, classification of activities as falling under "Cargo Handling Service," applicability of extended period for demand confirmation, and imposition of penalties under Sections 76, 77 & 78 of the Finance Act, 1994.

Detailed Analysis:

Service Tax Demand on "Cargo Handling Services":
The appeal arose from an Order-in-Original confirming a Service Tax demand on the appellant for loading coal into tippers, classified as "Cargo Handling Services." The appellant contended that the activity was composite, involving transportation as the main activity, and relied on various tribunal decisions to support their argument. The Revenue argued that loading coal constituted "Cargo Handling Service" as defined in the Finance Act, 1994. The Tribunal analyzed the definition of "Cargo Handling Service" and concluded that loading coal for transportation qualified as such. The Tribunal referenced previous cases to support this conclusion, emphasizing that confusion regarding taxability did not warrant extended period invocation. The demand was upheld for the normal limitation period, with interest payable.

Classification of Activities under "Cargo Handling Service":
The Tribunal examined the nature of the activities undertaken by the appellant, focusing on loading coal into tippers. It determined that coal at pit-heads constituted cargo, falling within the definition of "Cargo Handling Service." References were made to previous tribunal decisions and a High Court ruling, supporting the inclusion of coal loading within the scope of the service. The Tribunal differentiated mining of sand as a separate activity not covered under "Cargo Handling Service."

Applicability of Extended Period for Demand Confirmation:
Regarding the invocation of the extended period for confirming the demand, the Tribunal noted the confusion surrounding the scope of "Cargo Handling Service" and conflicting decisions. It acknowledged the appellant's genuine belief in non-liability for Service Tax due to the ambiguity. Consequently, the Tribunal deemed the extended period unjustified in this case, limiting the demand to the normal period of limitation.

Imposition of Penalties:
Given the dispute's nature concerning service classification, the Tribunal deemed the imposition of penalties unwarranted. The matter was remanded to quantify the Service Tax demand for the normal limitation period, excluding sand mining from the scope of "Cargo Handling Service." The appellant was instructed to pay interest on the Service Tax demand for the normal period, with penalties not applicable due to the classification dispute.

In conclusion, the Tribunal upheld the Service Tax demand on loading coal under "Cargo Handling Service," excluded sand mining from the scope, restricted the demand to the normal limitation period, and deemed penalties unnecessary due to the classification dispute. The matter was remanded for quantification of the demand, with interest payable for the normal period.