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2024 (7) TMI 69 - AT - Service TaxClassification of service - goods transport service or cargo handling services? - transportation of coal from railway siding to the factory of JK Paper Ltd and transportation of coal ash from power house of JK Paper to stone quarry - HELD THAT - From the consignment note it is clear that the activity is of transportation of goods. We also perused the contract between the appellant and JK Paper Ltd which included the activity of unloading of cargo for which Rs. 15 per ton charges is fixed and transportation of cargo from railway siding to the factory of JK Paper and feeding into coal crusher for which a charge of Rs. 44 per MT is fixed. Accordingly, as per these terms and conditions major activity of the appellant is transportation of goods and other activities are incidental to GTA. Therefore, the appellant s activity pre-dominantly is GTA service. The activity of the appellant is pre-dominantly a transportation service for which tax liability lies with the service recipient in the present case JK Papers Ltd and not with the appellant. The impugned orders are not sustainable, hence, the same are set aside - Appeal allowed.
Issues Involved: Classification of services provided by the appellant, liability for service tax, and applicability of relevant notifications and circulars.
Issue-Wise Detailed Analysis: 1. Classification of Services Provided by the Appellant: The primary issue was whether the appellant's services should be classified under "Goods Transport Agency (GTA)" or "Cargo Handling Services." The appellant provided transportation of coal from the railway siding to the factory of M/s. JK Papers Limited and transportation of coal ash from the power house to a stone quarry. The appellant believed these services fell under GTA, which would make M/s. JK Paper Limited responsible for paying service tax under reverse charge. The department contended that these services were cargo handling services, thus making the appellant liable for service tax. 2. Liability for Service Tax: The appellant argued that their services were predominantly transportation services, supported by consignment notes and contracts specifying charges for transportation and incidental activities like loading and unloading. They cited Circular No. 186/5/2015-ST and Circular No. 104/07/2008-ST, which clarified that ancillary services provided in the course of transportation do not alter the principal service of transportation. The appellant also referenced judgments from various tribunals and high courts, such as Sainik Mining & Allied Services Limited and Commr. of C.Ex. & Cus., Bhubaneswar-II vs. B.K Thakkar, which supported their claim that incidental activities do not change the nature of the service to cargo handling. 3. Applicability of Relevant Notifications and Circulars: The appellant relied on Notification No. 26/2012-ST and Notification No. 30/2012-ST, which stipulate that service tax on GTA services is payable by the service recipient under reverse charge. The Board Circular No. 186/5/2015-ST was particularly cited to emphasize that ancillary services like loading/unloading provided during transportation do not constitute independent services but are part of the composite transportation service. Judgment: The tribunal concluded that the appellant's services were predominantly transportation services, with incidental activities like loading and unloading not altering the nature of the service. This classification was supported by the consignment notes and the contract terms, which specified charges for transportation and incidental activities. The tribunal referred to the Board Circular No. 186/5/2015-ST, which clarified that ancillary services provided during transportation do not change the principal service's nature. The tribunal also cited several judgments, including Sainik Mining & Allied Services Limited and Commr. of C.Ex. & Cus., Bhubaneswar-II vs. B.K Thakkar, which supported the appellant's position. Conclusion: The tribunal held that the appellant's activities were predominantly transportation services, making M/s. JK Paper Limited liable for service tax under reverse charge. The impugned orders demanding service tax from the appellant were set aside, and the appeals were allowed. Pronouncement: The judgment was pronounced in the open court on 01.07.2024.
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