2017 (9) TMI 1329 - AT - Service Tax

Cargo Handling Services - the Commissioner (Appeals) dropped the demand on the ground that the activity undertaken by the appellant is mining service and the same is taxable only w.e.f. 1/6/2007 - Held that - the activity mentioned in Sl. No. (2) above is for loading and transportation of coal from one point to another point within the mines. The contract is mainly for transportation of raw coal for further processing and involves loading and unloading of the dumpers/tippers - the activity has been decided in the appellant s own case in their favour as reported in Sainik Mining & Allied Services Ltd. Vs. Commr. of Central Excise Customs & Service Tax BBSR 2007 (11) TMI 90 - CESTAT KOLKATA where it was held that the transportation of coal within the mining area is not covered under the category of Cargo Handling Services - there is no justification to uphold the demand of Service Tax under the category of Cargo Handling services for the work carried out in respect of transportation of coal within the Mining area. Activity of hiring pay loaders for mechanical transfer of finished goods from Railway siding inside the Mines into Railway wagons for outward transportation - demand - Held that - the issue is covered against the appellant in the case of M/s. Gajanand Agarwal Vs. CCEx BBSR 2008 (6) TMI 163 - CESTAT KOLKATA where it was held that any activity incidental to freight of cargo is liable to be taxed under cargo handling service . Mode of transport is irrelevant for incidence of levy once the service provided meets the test of handling of cargo in the manner envisaged by law - demand upheld. Appeal allowed in part and part matter remanded to the adjudicating authority only for the purpose of re-quantifying the demand and the associated penalties.

Summary

Issues:
Service tax demand under Cargo Handling Service category for specific works executed. Appeal against Order-in-Original No.CCE/BBSR-II/S. Tax/No.09-Commissioner/2008 dated- 29/07/2008. Appellant's contention on tax liability for different types of works. Time-barred demand argument.

Analysis:

Issue 1: Tax Liability for Extraction and Transfer of Coal
The appellant executed work orders involving extraction and transfer of coal for M/s. Mahanadi Coal Fields Ltd. The Department demanded Service Tax under Cargo Handling Service category. The Tribunal noted that the activity of coal extraction falls under Mining service, taxable only from 1/6/2007. The Commissioner's order for the earlier period favored the appellant, and the Revenue did not appeal. The Tribunal held that coal extraction is mining activity, inapplicable for service tax pre-2007.

Issue 2: Tax Liability for Mechanical Transfer and Transportation of Coal
The appellant's work involved mechanical transfer and transportation of coal within mines. The Tribunal referred to a previous case where a similar activity was not considered Cargo Handling Services. The Tribunal emphasized that the primary activities were coal movement within the mining area, not cargo handling. Following precedent, the demand under Cargo Handling services for coal transportation within the mining area was not justified.

Issue 3: Tax Liability for Hiring of Pay Loaders
The third demand pertained to hiring pay loaders for transferring goods from Railway siding to wagons. The Tribunal cited a case where such activity was deemed cargo handling service, falling under tax liability. The Tribunal upheld the demand for this activity based on the precedent, declining to intervene in the penalty imposition due to confusion regarding taxability at an early law implementation stage.

In conclusion, the appeal was partly allowed, remanding the matter for re-quantifying the demand and penalties. The Tribunal's decision was based on the specific nature of activities and their classification under relevant tax categories, emphasizing precedent and legal interpretations to determine tax liabilities accurately.