2008 (7) TMI 265 - AT - Service Tax

Loading and transportation of coal - demand under category of cargo handling service - applicant has made out a strong prima facie case for waiver in the light of Tribunal s order in Sainik Mining & Allied Services Ltd. where it was held that mechanical transfer of coal from the coal face to tippers and subsequent transportation of the coal within the mining area does not come under the purview of cargo handing service stay granted

Summary

Issues:
- Application for waiver of pre-deposit of service tax and penalty under Section 78, Rs. 200/- per day during which the failure to pay service tax continues or @ 2% of such tax per month, and Rs. 1,000/- under Section 77 of the Finance Act, 1994.
- Confirmation of demand of tax for cargo handling service of loading and transportation of coal.

Analysis:
1. The judgment addresses the application for waiver of pre-deposit of service tax and penalty under the Finance Act, 1994. The demand of tax was confirmed based on the provision of cargo handling service for loading and transportation of coal to a specific entity. The applicant sought a waiver citing a similar case precedent, Sainik Mining & Allied Services Ltd. v. CCE.C & ST. Bhubaneshwar, where it was established that the activities undertaken did not fall under the purview of cargo handling service as defined by the Act. The Tribunal found a strong prima facie case for waiver based on this precedent and stayed the recovery pending the appeal.

2. The Tribunal referred to the definition of cargo handling service under Section 65(21) of the Finance Act, 1994, which includes loading, unloading, packing, or unpacking of cargo, among other services. It was highlighted that the activities of the appellants primarily involved the movement of coal within the mining area and transfer of coal to tippers, which were not considered as cargo handling services. The judgment emphasized that the transportation of coal within the mining area did not fall under the category of cargo handling service, and therefore, the gross amounts received for such services were not taxable under this category. Additionally, it was noted that there was no suppression or misstatement regarding the nature of activities undertaken, leading to the conclusion that the imposition of penalties was unjustified.

3. The Tribunal, after comparing the facts of the present case with the precedent case, found similarities and concluded that the Commissioner had wrongly distinguished the two cases. Following the ratio of the precedent case, the Tribunal waived the pre-deposit of the amounts in question and stayed the recovery pending the appeal. This decision was based on the interpretation of the definition of cargo handling service and the activities undertaken by the appellants, aligning with the findings of the precedent case.

In conclusion, the judgment provided a detailed analysis of the application for waiver of pre-deposit of service tax and penalty, highlighting the interpretation of cargo handling service under the Finance Act, 1994, and the relevance of a precedent case in determining the outcome of the appeal.