2019 (1) TMI 322 - AT - Service Tax

Classification of services - appellant has been provided work contract for transportation of coal from mining area either to washery or to the railway siding by employing tippers and trucks for this purposes - Cargo Handling services or GTA Service? - Reverse Charge Mechanism - Held that - It can be seen from a plain reading of 65A (2)(b) that the classification in the case of combined service is to be decided by analyzing the fact as to which service gives essential character to the service being performed - As can be seen from the contract that the essential character of the service for which contract has been entered by the service provider is that the service received are for transportation of coal for mining area to the railway siding and the activity of loading/ unloading mechanically or otherwise is in our view, is only incidental to the activity of transportation of the cargo in these cases - thus, the service provided by the appellants have rightly been classified in the Goods Transportation Agency service. This issue has already been examined by the Hon ble Supreme Court in their decision in the case of CCE & ST Raipur Vs Singh Transporters 2017 (7) TMI 494 - SUPREME COURT wherein the Hon ble Supreme Court has held that activity undertaken by the assessee of transporting of coal from the pithead of the mines to railway siding is more appropriately classifiable under service head of Transport of Goods by road services. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of services under Cargo Handling Service or Goods Transport Agency Service.

Analysis:
1. The appellant, engaged in Goods Transporter Agency Service, was issued a Show Cause Notice demanding service tax under Cargo Handling Service instead of Goods Transport Agency Service. The Joint Commissioner confirmed the charges and imposed penalties, which were upheld by the Commissioner (Appeal), leading the appellant to appeal before the Tribunal.

2. The main issue was whether the service provided by the appellant should be classified under Cargo Handling Services or Goods Transport Agency Service. The Tribunal analyzed the sample contracts with M/s Western Coal Field Ltd. to determine the nature of the services provided.

3. The contracts indicated that the rates were based on the distance for transporting coal, subject to fuel price changes, emphasizing transportation over handling. Section 65A of the Finance Act, 1994, regarding the classification of taxable services was examined to determine the essential character of the service provided by the appellant.

4. The Tribunal noted that the essential character of the service was transportation of coal from mining areas to railway sidings, with loading/unloading being incidental. Consequently, the service was rightly classified as Goods Transportation Agency service.

5. Referring to a Supreme Court judgment, the Tribunal reinforced its decision, stating that transporting coal from mines to railway sidings falls under the service category of Transport of Goods by road services, supporting the classification of the appellant's services.

6. Therefore, the Tribunal concluded that the appellant's services were correctly classified under Goods Transportation Agency service, setting aside the previous order and allowing the appeal with any consequential relief.

This detailed analysis of the judgment highlights the key issues, the arguments presented, and the Tribunal's reasoning for classifying the services under Goods Transportation Agency service rather than Cargo Handling Service.