2025 (1) TMI 481 - AT - Service Tax

Liability to pay service tax on the taxable value received - Cargo Handling Services - providing services of cargo handling to the projects of Northern Coalfield Ltd. by deploying the tipping trucks, for loading of coal into contractor s tipping trucks by contractor s pay loaders - reverse charge mechanism - extended period of limitation. Liability to pay service tax on the taxable value received - Cargo Handling Services - providing services of cargo handling to the projects of Northern Coalfield Ltd. by deploying the tipping trucks, for loading of coal into contractor s tipping trucks by contractor s pay loaders - HELD THAT - The issue of transportation of goods is different from cargo handlings transportation of coals from the coal mines to the tippers/trucks is no more res integra as it stands decided that the activity is not a Cargo Handling Service but is that of transportation of goods by road. The service recipient is liable to pay service tax on this activity under Reverse Charge Mechanism. Apparently and admittedly M/s. Northern Coalfield Ltd., the service recipient has already discharged the same. These observations are sufficient to hold that the demand for this partial period has rightly been dropped by Commissioner (Appeals) - There is no evidence on record that respondent-assesse is a Goods Transport Agency nor any consignment note is placed on record. Thus in terms of Section 66B, there is no tax liability on the impugned activity even for the post negative period. The demand for this period is also rightly dropped by Commissioner (Appeals). Invocation of extended period of limitation - HELD THAT - It is observed from the SCN that the demand has been proposed based upon the respondent s own documents. It is also clear that the fact of discharge of the impugned service tax liability by the service recipient/Northern Coalfield Ltd. under Reverse Charge Mechanism was also brought to be notice of the department. There are no act of alleged suppression on part of the respondent-assessee. The department rather has failed to take into consideration the submissions of the assessee-respondent at the time of issuing the show cause notice. In absence of any such evidence which may prove the mala fide intent with the assessee to evade payment of tax, the department was not entitled to invoke the proviso to Section 73 of Finance Act, 1994 - The show cause notice is therefore held to be barred by time. Conclusion - i) The issue of transportation of goods is different from cargo handlings transportation of coals from the coal mines to the tippers/trucks is no more res integra as it stands decided that the activity is not a Cargo Handling Service but is that of transportation of goods by road. The service recipient is liable to pay service tax on this activity under Reverse Charge Mechanism. ii) In absence of any evidence which may prove the mala fide intent with the assessee to evade payment of tax, the department was not entitled to invoke the proviso to Section 73 of Finance Act, 1994. Appeal of Revenue dismissed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the services provided by the respondent-assessee to Northern Coalfield Ltd. fall under the category of "Cargo Handling Services" as defined under Section 65(23) of the Finance Act, 1994, thereby making them liable for service tax.
Whether the demand for service tax for the period post the introduction of the negative list (01.07.2012 to 31.03.2013) is justified.
Whether the extended period of limitation for demanding service tax is applicable in this case.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Classification of Services as Cargo Handling Services

Relevant legal framework and precedents: The definition of "Cargo Handling Services" under Section 65(23) of the Finance Act, 1994, includes loading, unloading, packing, or unpacking of cargo. Precedents include the case of Singh Transporters vs. Commissioner of Central Excise, Raipur, which clarified the distinction between cargo handling and transportation services.
Court's interpretation and reasoning: The court interpreted that the services provided by the respondent were not "Cargo Handling Services" but rather "Transportation of Goods by Road Services." The court emphasized the distinction between "cargo" and "goods," noting that "cargo" refers to goods that have already begun their journey as part of a shipment.
Key evidence and findings: The court found that the coal handled by the respondent had not yet started its journey as cargo and was still part of Northern Coalfield Ltd.'s stock. Therefore, the activity could not be classified as cargo handling.
Application of law to facts: The court applied the definitions and precedents to conclude that the respondent's activities were not taxable under the "Cargo Handling Services" category.
Treatment of competing arguments: The department argued that the services should be classified as cargo handling, while the respondent contended they were transportation services. The court sided with the respondent, citing the absence of evidence to classify the services as cargo handling.
Conclusions: The court concluded that the services were not "Cargo Handling Services" and, therefore, not liable for service tax under that category.

Issue 2: Taxability for the Post Negative List Period

Relevant legal framework and precedents: The introduction of the negative list in Section 66D of the Finance Act, 2012, which excludes certain services from taxability.
Court's interpretation and reasoning: The court noted that the services provided by the respondent did not fall under any of the taxable categories post the negative list introduction. Specifically, the services were not provided by a "Goods Transport Agency" and did not involve issuing consignment notes.
Key evidence and findings: There was no evidence to suggest the respondent was a Goods Transport Agency, nor was there any consignment note issued.
Application of law to facts: The court applied the provisions of Section 66B and Section 66D to determine that the services were not taxable in the post negative list period.
Treatment of competing arguments: The department's argument for taxability was countered by the respondent's evidence and legal interpretation, which the court found convincing.
Conclusions: The court upheld the decision to drop the demand for the post negative list period.

Issue 3: Invocation of Extended Period of Limitation

Relevant legal framework and precedents: The proviso to Section 73 of the Finance Act, 1994, allows for an extended period of limitation in cases of suppression or intent to evade tax.
Court's interpretation and reasoning: The court found no evidence of suppression or intent to evade tax by the respondent. The demand was based on the respondent's own documents, and the service tax liability had already been discharged by Northern Coalfield Ltd. under the Reverse Charge Mechanism.
Key evidence and findings: The court noted the absence of any act of suppression or mala fide intent on the part of the respondent.
Application of law to facts: The court applied the legal standard for invoking the extended period and found it inapplicable in this case.
Treatment of competing arguments: The department's attempt to invoke the extended period was rejected due to lack of evidence of suppression.
Conclusions: The court held that the demand was time-barred and the extended period of limitation was not applicable.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: "The intention of the Legislature can also be gathered from the new definition of Cargo Handling Services under Section 65(23) substituted by Finance Act, 2008 with effect from 16-5-2008."
Core principles established: The distinction between "cargo" and "goods" is crucial for determining the applicability of service tax under "Cargo Handling Services." The introduction of the negative list requires careful consideration of service classifications.
Final determinations on each issue: The court upheld the decision to classify the services as transportation rather than cargo handling, dismissed the demand for the post negative list period, and found the extended period of limitation inapplicable.

The judgment comprehensively addressed the classification of services, the applicability of the negative list, and the invocation of the extended period of limitation, ultimately dismissing the department's appeal and upholding the respondent's position.

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