2024 (6) TMI 911 - AT - Service Tax

Classification of services - separate rates have been provided for different activities - whether the appellant is liable for benefit of being a goods transport agency operator or is required to be subjected to Service Tax as a provider of cargo handling and business auxiliary services? - HELD THAT - The appellants have produced on record a certificate from TISCO duly countersigned by the jurisdictional Central Excise authorities that the appellant had handled the cargo meant for export and therefore it was exempted from Service Tax in accordance with Circular No. B.11/1/2002-TRU dated 01.08.2002. It is found that the bulk of the payment is on account of transportation. Thus it cannot be disputed that the main or principal service and the essential feature of the service rendered by the appellant to TISCO was that of transportation of Chrome Ore/Concentrate from Sukinda Chromite Mines to Jajpur Road. The fact of unloading the goods at railway siding, guarding thereof, yard management, inventory management and loading of the goods to the wagons were in the nature of being incidental to the transportation of the goods from the mines to the railway sidings. The contract in the present case is a composite works contract and cannot be called upon for vivisection, in terms of rates for various activities being provisioned in the said Work Orders. Mere mentioning of separate rates for various activities, render the composite contract as vivisected, particularly in the light of the Board s Circular dated 20.02.2008 clarifying that the method of charging (billing) was not determinative of whether the service was in the nature of a multiple service or otherwise - there is nothing in the impugned work order, so as to be suggestive of submissions of Bills by the appellant to TISCO, based on individual activities at the specified rates. The service rendered by the appellant would need to be considered as a GTA service and not required to be categorized separately into cargo handling service or business auxiliary service . The impugned order is not in accordance with law and therefore liable to be set aside - Appeal allowed.

Summary

Issues Involved:
1. Classification of services rendered by the appellant.
2. Applicability of Service Tax on incidental activities.
3. Invocation of extended period of limitation.
4. Liability for Service Tax payment and penal consequences.

Summary of Judgment:

1. Classification of Services Rendered by the Appellant:
The primary issue was whether the appellant's services should be classified under 'goods transport agency service' (GTA) or as 'cargo handling' and 'business auxiliary' services. The Tribunal concluded that the appellant's main service was the transportation of Chrome Ore/Concentrate, and the incidental activities like unloading, yard management, and loading were part of this composite service. The Tribunal relied on Board's Circulars, which clarified that a composite service should be treated as a single service based on the main service, and ancillary services should be included in the GTA service.

2. Applicability of Service Tax on Incidental Activities:
The appellant argued that incidental activities were not separately liable to Service Tax. The Tribunal agreed, noting that the bulk of the payment was for transportation, and the incidental activities were merely for ease of payment calculations. The Tribunal emphasized that the method of invoicing does not alter the composite nature of the service and that the essential feature of the service was transportation.

3. Invocation of Extended Period of Limitation:
The appellant contended that the show cause notice issued was barred by limitation as their activities were known to the department since 2007. The Tribunal found merit in this argument, stating that there was no suppression on the part of the appellant and that the issue was one of interpretation of a composite contract. Therefore, the extended period of limitation was not invokable.

4. Liability for Service Tax Payment and Penal Consequences:
The Tribunal noted that TISCO, as the service receiver, was liable to pay the Service Tax for GTA services. The appellant had obtained Service Tax registration in 2007 and filed ST-3 returns regularly, indicating no change in the nature of work or billing methodology. Thus, the Tribunal concluded that the appellant was not liable for penal consequences, as the department was aware of the facts since 2007. The Tribunal also referenced previous decisions supporting the classification of the appellant's services as GTA.

Conclusion:
The Tribunal set aside the impugned order, ruling that the appellant's services should be classified as 'GTA service' and not as 'cargo handling' or 'business auxiliary' services. The appeal was allowed with consequential relief as per law.