2017 (11) TMI 1279 - AT - Service Tax

Cargo Handling services - non-payment of service tax - Held that - It is clear that the assessee/appellant are engaged in unloading iron ore from railway racks at Bilaspur siding, loading of such iron ore into the trucks, transportation upto the factory and thereafter unloading the said iron ore in the premises of the client s factories - Considering the quantification of consideration received alongwith the quantum of cargo handled, we are of the view that the assessee/appellant are essentially involved in cargo handling service and the transport being incidental to said activities - It is also noted that the assessee/ appellant did collect service tax from various clients under cargo handling service and upon enquiry by the Revenue, deposited an amount of ₹ 9.98 lakhs under the said category. It would appear that the assessee/appellant treated the said services as cargo handling services and are contesting the tax liability only after the proceedings have been initiated by the Revenue. Extended period of limitation - Held that - appellant have collected service tax under Cargo Handling Service from various clients and deposited the same upon initiation of enquiry by the Revenue - it is not open to the assessee/appellant to contest the demand for extended period on the ground of their bonafideness. Penalties - Held that - the impugned order fell in error in stating that simultaneous penalties cannot be imposed on the assessee/appellant for the same case - the impugned order is legally not sustainable with reference to non-imposition of penalty under Section 76. Appeal allowed - decided in favor of Revenue.

Summary

Issues:
1. Taxability of services rendered under Cargo Handling Service.
2. Contention on limitation for tax demand.
3. Imposition of penalties under Section 76 and 78 simultaneously.

Issue 1: Taxability of services under Cargo Handling Service:
The case involved an appeal against an order confirming a service tax liability on the appellant for unloading, loading, and transporting iron ore. The appellant argued they should not be taxed under Cargo Handling Service as they are transport contractors primarily engaged in transportation activities. The lower authorities based the tax liability on the total consideration received by the appellant and the quantum of iron ore handled. The Tribunal noted that the appellant's activities, including unloading, loading, and transportation, were essentially cargo handling services with transport being incidental. Despite collecting service tax under cargo handling service from clients, the appellant contested the tax liability only after Revenue initiated proceedings. The absence of a written contract led to reliance on taxable consideration and cargo quantity, leading to the conclusion that the appellant was involved in cargo handling service.

Issue 2: Contention on limitation for tax demand:
The appellant contested the demand on limitation grounds, claiming no malafide intent for suppression due to interpretation issues regarding tax entry. However, as the appellant had collected and deposited service tax under Cargo Handling Service upon Revenue's enquiry, the Tribunal held that contesting the demand for an extended period on bonafideness grounds was not valid.

Issue 3: Imposition of penalties under Section 76 and 78 simultaneously:
The Revenue appealed the order setting aside the penalty under Section 76, arguing that simultaneous penalties under Sections 76 and 78 could be imposed as per legal provisions. Citing precedents, the Tribunal agreed with the Revenue, stating that penalties under both sections could be imposed simultaneously. Therefore, the impugned order's error in not imposing the penalty under Section 76 was rectified, and the appeal by the Revenue was allowed.

In conclusion, the Tribunal dismissed the appeal by the appellant while allowing the appeal by the Revenue based on the detailed analysis of the taxability of services under Cargo Handling Service, the limitation for tax demand, and the imposition of penalties under Sections 76 and 78.