2011 (2) TMI 1140 - HC - Service Tax

Cargo Handling Agent services - demand of service tax - invoking extented period - whether Asst. Commissioner has no competence to adjudicate the case? - Held that - On the basis of the said terms and conditions of the contract between the parties it has come to the conclusion by the Assessing Officer and held that activity undertaken by the appellant squarely falls within the cargo handling service and service tax is payable on the gross amount received by the noticee. As the appellant received the amount for the cargo handling service rendered by them to M/s. MCL to the proper officer of Central Excise by not obtaining the registration, not paying service tax and not submitting any return with the intent to evade payment of service tax. The appellant failed to disclose wholly or truly all the material facts required for verification thereby the values of taxable service has escaped and service tax was not paid. Therefore, Assessing Officer held that the extended period in terms of Section 73(1)(a) of Chapter V of the Finance Act, 1994 is rightly invoked against the appellant and determined the tax recoverable under Section 68 read with Section 73 of the Finance Act, 1994 along with interest under Section 75 of the Act also imposed penalty of Rs. 500/- under Section 75A of the Act. The determination of service tax is quasi judicial power of the Asst. Commissioner of Excise and he has issued the show cause notice and proceeded with. After issuance of the notice to the appellant prior to issuance of the notification No. 30/2005-S.T., dated 10-8-2005 the officer of the above rank had no jurisdiction to decide the liability of the assessee in the absence of such mentioning in the notification. The proceedings were concluded by the assessing officer who had the jurisdiction in view of the power vested in him prior to the notification was issued. Therefore, he had the competency to proceed with the proceedings. The show cause notice is within the period of limitation as provided under clause (e) to Section 73(1) proviso of Chapter V of the Finance Act, wherein one year period is substituted by five years by amendment to the said provision. Against assessee.

Summary

Issues Involved:
1. Whether the activities of the Appellant can be termed as "Cargo Handling Agent" within the meaning of Section 65(23) read with Section 65(105)(zr).
2. Whether the activities of the Appellant are more appropriately covered under "Supply of Tangible Goods Services" u/s 65(105)(zzzzj).
3. Whether the adjudication order dated 31-8-2005 confirming service tax demand is without jurisdiction in view of Notification No. 30/2005-S.T., dated 10-8-2005 and Circular No. 80/1/2005-S.T., dated 10-8-2005.
4. Whether the extended period of limitation can be invoked under the proviso to Sec. 73(1) for mere inactions, failure, or negligence by the assessee.

Detailed Analysis:

1. Cargo Handling Agent Classification:
The court examined whether the appellant's activities fell under "Cargo Handling Services" as defined in Section 65(23) read with Section 65(105)(zr) of the Finance Act, 1994. The appellant argued that their activities were limited to hiring out Pay Loaders and did not constitute cargo handling. However, the CESTAT upheld the demand for service tax, noting that the primary objective was handling coal as cargo, taxable under "Cargo Handling Services." The court concurred, stating that the activities involved loading coal into railway wagons, which qualifies as cargo handling.

2. Supply of Tangible Goods Services:
The appellant contended that their services should fall under "Supply of Tangible Goods Services" u/s 65(105)(zzzzj). The court, however, found that the contracts were primarily for handling coal rather than merely supplying equipment. The use of Pay Loaders was incidental to the main service of loading coal, thus falling under cargo handling and not under the supply of tangible goods.

3. Jurisdiction of Adjudication Order:
The appellant challenged the jurisdiction of the adjudication order dated 31-8-2005 based on Notification No. 30/2005-S.T. and Circular No. 80/1/2005-S.T. The court held that the Assistant Commissioner had jurisdiction to continue proceedings initiated before the notification. The show cause notices were issued before 10-8-2005, and hence, the adjudication was valid.

4. Extended Period of Limitation:
The appellant argued against the invocation of the extended period of limitation under the proviso to Sec. 73(1). The court found that the appellant failed to disclose material facts, leading to evasion of service tax. Thus, the extended period of limitation was rightly invoked, and the show cause notice was within the permissible period.

Conclusion:
The court dismissed the appeals, affirming the CESTAT's findings. The activities of the appellant were classified as "Cargo Handling Services," and the adjudication order was held to be within jurisdiction. The invocation of the extended period of limitation was also upheld, rejecting the appellant's contentions.