2018 (6) TMI 878 - AT - Service Tax

Classification of Services - appellant was required to hire hydraulics escalators for removal of over burden, load the same into trucks/dippers and transport the same to the centralized gypsum grinding units at Rawla - whether the services fall under the category of Cargo Handling Services? - Held that - The adjudicating authority has proceeded with the adjudication of the case and appears to have examined only the contract/agreement executed by the appellant with RSMML - the matter is required to be remanded to the Adjudicating Authority for re-examination of the issue in its entirety by considering not only the contract executed with RSMML but also the claim of the appellant that bulk of the activity has been carried out for other cement companies for mere transportation of their goods - appeal allowed by way of remand.

Summary

Issues:
1. Challenge to Order-in-Original dated 13/12/2013 regarding service tax payment under Cargo Handling Service category for activities carried out for a specific entity.
2. Dispute over the total consideration received by the appellant and the proportion related to the work executed for the specific entity.
3. Failure of the adjudicating authority to consider the detailed reply and supporting documents submitted by the appellant.
4. Interpretation of the activities carried out for the specific entity as falling under Cargo Handling Service.
5. Request for remand of the matter for re-examination by considering the broader scope of the appellant's business activities.

Analysis:
The appellant challenged the Order-in-Original dated 13/12/2013, which proposed a demand for service tax under the Cargo Handling Service category for activities performed for a specific entity, Rajasthan State Mines and Minerals Limited (RSMML). The appellant contended that the total consideration received, about ?17 crores, included amounts from various cement companies for transportation services, with only a small fraction related to the work executed for RSMML. The lower authority confirmed a service tax demand of ?2,13,13,659 along with interest and penalty, based on the opinion that the activities for RSMML fell under the Cargo Handling Service category.

The appellant argued that the adjudicating authority failed to consider their detailed reply and supporting documents, which highlighted that the demand for service tax covered not only work for RSMML but also contracts with cement companies involving only transportation of goods. The appellant emphasized that even the activities for RSMML primarily entailed transportation of minerals and should not be classified as Cargo Handling Services. The appellant requested a remand for a comprehensive review of their submissions.

After hearing both parties, the Tribunal noted that the adjudicating authority had primarily focused on the contract with RSMML and had not considered the broader scope of the appellant's business activities. The Tribunal agreed with the appellant's assertion that the work for RSMML constituted a small fraction of their overall business during the disputed period. Therefore, the Tribunal decided to set aside the impugned order and allowed the appeal by remanding the matter for a complete re-examination, instructing the Adjudicating Authority to consider not only the RSMML contract but also the appellant's claim regarding the majority of activities carried out for other cement companies for transportation purposes.