2023 (5) TMI 337 - AT - Service Tax

Classification of Services - Cargo Handling Services or Goods Transport Agency service - transporting coal in tipping trucks including loading of coal into said trucks and in some cases loading into Contractor s tipping trucks by the contractor s pay loaders - HELD THAT - Cargo Handling Service has not been defined in the Act but is defined in Circular No. B11/1/2002-TRU dated 01-08-2002 as the services of transporting coupled with loading unloading packing unpacking can be called as Cargo Handling Service if those are done by the authorities as that of Container Corporation of India Airport Authority of India Inland Container Depot Container Freight Stations etc. Apparently and admittedly the appellant herein is none of these kinds of companies. Hon ble Supreme Court also while discussing the case of THE DEPUTY COMMISSIONER CENTRAL EXCISE ANOTHER VERSUS SUSHIL COMPANY 2016 (4) TMI 987 - SUPREME COURT has appreciated the said circular holding that Well known examples of cargo handing service are services provided in relation to cargo handling by the Container Corporation of India Airport Authority of India Inland Container Depot Container Freight Stations. This is only an illustrative list. The Hon ble Supreme Court has accepted Hon ble High Court interpretation to the Entry viz. Cargo Handling Service wherein it was observed that there must be a cargo i.e. a packed or unpacked commodity accepted by a transporter or carrier for carrying the same from one destination to another. It is only after the commodity becomes a cargo its loading and unloading at the freight terminal for being transported by any mode becomes a cargo handling service if it is provided by an independent agency and the service provider must independently be involved in loading unloading or packing-unpacking of the cargo. The decision of the Hon ble Supreme Court in the case of SINGH TRANSPORTERS VERSUS COMMISSIONER OF CENTRAL EXCISE RAIPUR 2012 (7) TMI 566 - CESTAT NEW DELHI squarely covers this issue - The issue involved therein was whether the coal transported from pitheads of the mines to the railway sidings would fall within the taxable service as defined under Section 65(105)(zzzy). Though the service in question in the said case was whether it was a mining service but the outcome is relevant for the present adjudication wherein it was held that the aforementioned activity is an activity as that of transportation of goods. Larger Bench decision of the Tribunal rendered in the case of ATMA STEELS PVT. LTD. AND OTHERS VERSUS COLLECTOR OF CENTRAL EXCISE CHANDIGARH AND OTHERS 1984 (6) TMI 60 - CEGAT NEW DELHI it was held that once the provisions has been changed then the existing provisions at the time of issue of show cause notice should be applicable and not the earlier provisions. It is found that in a catena of decisions it has been held the demand can be confirmed only as per the provisions that exist at that time. Hence the show cause notice issued and adjudicated on the basis of the provisions existing during the period prior to the disputed period cannot be upheld - appeal allowed.

Summary

Issues Involved:
1. Classification of services rendered by the appellant.
2. Applicability of service tax provisions post-01.07.2012.
3. Validity of the show cause notice and demand issued under pre-01.07.2012 provisions.

Summary:

1. Classification of Services Rendered by the Appellant:

The primary issue was whether the services rendered by the appellant fell under 'Cargo Handling Services' as defined under Section 65(23) of the Finance Act, 1994, or as 'Goods Transport Agency Services' under Section 65(50b). The appellant contended that their services were limited to transporting coal in tipping trucks within the mining area, with loading being incidental, and thus should not be classified as 'Cargo Handling Services'. The Tribunal referred to the definition of 'Cargo Handling Service' which includes loading, unloading, packing, or unpacking of cargo, provided by specific agencies, and noted that the appellant did not fit this description. The Tribunal cited several precedents, including the Supreme Court's decision in Singh Transporters Vs. Commissioner of Central Excise, Raipur, which supported the appellant's position that their activities were more appropriately classified under 'Goods Transport Agency Services'.

2. Applicability of Service Tax Provisions Post-01.07.2012:

The Tribunal acknowledged that significant changes were made to the Service Tax provisions with the introduction of the Negative List concept via the Finance Act, 2012. It was noted that the Department's show cause notice and the impugned order relied on provisions applicable prior to 01.07.2012, without referencing the new Charging Section 66B of the Act, which became effective from 01.07.2012. The Tribunal emphasized that the existing provisions at the time of the show cause notice should be applicable, as supported by the Larger Bench decision in M/s Atma Steels Pvt. Ltd. & Others v. CCE, Chandigarh & Others.

3. Validity of the Show Cause Notice and Demand Issued Under Pre-01.07.2012 Provisions:

The Tribunal found that the show cause notice issued on 21.10.2015 and the subsequent demand were based on provisions that were no longer in effect during the disputed period. This approach was deemed unsustainable, as confirmed by multiple decisions, including M/s Mahakoshal Beverages Pvt. Ltd. Vs Commissioner of Cz. Ex., Belgaum, which held that demands cannot be confirmed in accordance with deleted provisions. Consequently, the Tribunal set aside the order under challenge and allowed the appeal.

Conclusion:

The Tribunal concluded that the services provided by the appellant did not fall under 'Cargo Handling Services' but rather 'Goods Transport Agency Services'. The show cause notice and demand based on outdated provisions were invalid. The appeal was allowed, and the order under challenge was set aside.