2016 (4) TMI 156 - AT - Service Tax

Coal Handlers - Classification - Service under the Cargo Handling Service - Coal handlers are involved in the loading/unloading of coal in the collieries and into railway wagons in railway sidings - Held that - all the cases involving handling of coal in the collieries have been decided in favor of revenue on common grounds by holding the services to be classifiable as cargo handling services and there was no contrary view. In case of three of the appellants (handling coal in the mines), the decision has been taken by the Hon'ble High Court of Orissa and in two cases of the coal handlers, the decision has been taken by the Tribunal relying on the decision of Hon'ble High Court of Orissa. So, it is clear that in case of coal handlers listed as A(i) to A(v) in first para there is no contrary view. All the orders are aligned to the views expressed by the Hon'ble High Court of Orissa order dated 25.2.2011. Therefore, the matters relating to the coal handlers, not being contrary, do not appear to have been remanded to the CESTAT. Coal Packers - Classification - under packaging services and Cargo Handling Service - Engaged in Palletisation or packing of goods for the purpose of ease of transport - Held that - in case of Packers the decision of CESTAT (Bangalore) has been upheld by Hon High Court of AP and therefore merged with it. It would appear that the correct facts were not presented before the Hon Supreme Court. The contrary views in the cases listed before the Hon Supreme Court was only between the decision of Hon High Court of AP and that of Kolkata bench Tribunal, and that too only in case of Packers. There are no two decision of CESTAT which were before the Hon Supreme Court, and which were contrary to each other. In these circumstances the contesting parties may seek guidance from the Hon Supreme Court, as to the scope of the issues for resolution by the Tribunal. - Adjourned to be heard at later date

Summary

Issues Involved:
1. Classification of services provided by coal handlers under Cargo Handling Service.
2. Classification of services provided by packers under Cargo Handling Service and Packaging Service.
3. Scope of remand by the Supreme Court to the CESTAT.

Detailed Analysis:

1. Classification of Services by Coal Handlers under Cargo Handling Service:
The primary issue for coal handlers was whether their activities of loading/unloading coal in collieries and railway sidings fall under the "Cargo Handling Service" category. The High Court of Orissa upheld the Tribunal's decision, which classified these activities as cargo handling services under Section 65(23) of the Finance Act, 1994. The court noted that the activities included loading coal into railway wagons, which fits the definition of cargo handling service. The Tribunal and High Court both concluded that the coal handlers were liable to pay service tax on these activities, dismissing the argument that these services were mere transportation of goods.

2. Classification of Services by Packers under Cargo Handling Service and Packaging Service:
The packers, ITW India Ltd., were involved in activities such as palletisation, strapping, and marking of goods within the client's factory. The dispute was whether these activities should be classified under cargo handling services or packaging services. The Kolkata bench of the Tribunal initially classified these activities as cargo handling services. However, the Bangalore bench of the Tribunal, later upheld by the High Court of Andhra Pradesh, classified these activities under packaging services, noting that the activities were part of the manufacturing process and not cargo handling. The High Court of Andhra Pradesh emphasized that the services rendered were more appropriately described as packaging activities, which became taxable only from June 16, 2005.

3. Scope of Remand by the Supreme Court to the CESTAT:
The Supreme Court remanded the cases back to the CESTAT to resolve the conflict between the two Tribunal orders. The revenue argued that the remand was limited to cases where there was a contradiction between the Tribunal orders. However, the Supreme Court's order stated that "all the issues involved" should be decided by the larger bench of the CESTAT. The CESTAT noted that the remand was primarily for resolving the conflict in the classification of services provided by the packers, as there were no contradictory decisions in the cases involving coal handlers. The Tribunal observed that the decisions regarding coal handlers were consistent and aligned with the High Court of Orissa's ruling.

Conclusion:
The CESTAT concluded that the matters involving coal handlers did not require further adjudication as there were no contradictory decisions. However, the cases involving packers required resolution due to the conflicting decisions between the Kolkata and Bangalore benches of the Tribunal. The Tribunal suggested seeking guidance from the Supreme Court regarding the scope of issues to be resolved, as the remand seemed to pertain only to the packers' cases. The matters were adjourned for a later hearing.