2022 (11) TMI 266 - AT - Service Tax

Classification of services - contract with Gujarat State Electricity Corporation for the work of timely payment of railway freight and to undertake all such steps to ensure that freight pre-paid coal wagons reach the GSECL plant site and in return they were receiving commission - whether the services provided by the appellants were classifiable under the category of Clearing Forwarding Agent Service or under Business Auxiliary Service? - demand alongwith penalty u/s 78 - HELD THAT - The present case involved mix question of law and facts. The learned Commissioner (Appeals) decided the matter relying on the Tribunal s decision in the case of COAL HANDLERS PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA-I 2004 (5) TMI 5 - CESTAT, KOLKATA wherein it was held that the identical services are classifiable under clearing and forwarding agent service. Since this very judgement which is sole basis of the Commissioner (Appeals) order which has been set aside and party s appeal was allowed by the Hon ble Supreme Court, it is opined that since the identical facts and law point is involved, the learned Commissioner (Appeals) has to reconsider the matter in the light of the change of legal position between the Tribunal s decision in Coal Handlers and the Apex Court decision in M/S. COAL HANDLERS PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, RANGE KOLKATA I 2015 (5) TMI 249 - SUPREME COURT . Since the facts are also need to be compared and verified between this case and the case of Coal Handlers, the matter should be remanded back to the Commissioner (Appeals) to decide afresh in the light of Hon ble Supreme Court judgement in the case of Coal Handlers - appeal allowed by way of remand.

Summary

Issues:
Classification of services provided by the appellant to GSECL under Clearing & Forwarding Agent Service or Business Auxiliary Service.

Analysis:
The appellant was engaged in providing taxable services to Gujarat State Electricity Corporation (GSECL) and was registered with the service tax department. The issue arose during an audit where it was observed that the services provided by the appellant to GSECL, involving clearing and forwarding agent services, were not classifiable under Business Auxiliary Service but under Clearing & Forwarding Agent Service. The appellant had contracts with GSECL for timely payment of railway freight and loading supervision of coal wagons, receiving commission in return. The appellant had been paying service tax under Business Auxiliary Service for certain services. A Show Cause Notice was issued, and the matter was adjudicated, upholding the classification under Clearing & Forwarding Agent Service. The appellant, aggrieved by the order, filed an appeal before the Commissioner (Appeals) who upheld the demand of service tax and penalty under Section 78, relying on a previous Tribunal decision. However, the penalty under Section 76 was set aside, leading to the present appeal.

In the appeal, the appellant argued that their activities were similar to a previous case decided by the Tribunal but later reversed by the Supreme Court. The appellant contended that their case was on stronger grounds than the previous case and should be treated similarly. The Authorized Representative reiterated the findings of the impugned order. The Tribunal carefully considered the submissions and records, noting that the case involved a mix of law and facts. The Commissioner (Appeals) had relied on the Tribunal's decision in the previous case, which was subsequently reversed by the Supreme Court. Given the change in legal position, the Tribunal decided to remand the matter back to the Commissioner (Appeals) for a fresh decision, considering the Supreme Court's judgment in the previous case. The Tribunal set aside the impugned order and directed a fresh decision based on the observations made.

Therefore, the Tribunal's judgment focused on the classification of services provided by the appellant to GSECL, emphasizing the need to reconsider the matter in light of the change in legal position due to the Supreme Court's decision in a similar case. The case was remanded back to the Commissioner (Appeals) for a fresh decision, highlighting the importance of comparing the facts and legal aspects between the present case and the precedent case to reach a just conclusion.