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2019 (9) TMI 580 - AT - Service TaxClassification of services - Cargo Handling Service or port service - appellant has been providing the service of stevedoring service at Karwar Port and discharging the goods from the vessel to the wharf - HELD THAT - The services rendered by the appellant does not fall in the category of Cargo Handling Service prior to 1.7.2003. Further, during the impugned period, the services rendered by the appellant fall in the category of Port Service and not Cargo Handling Service as held by the apex court in the case of DCCE vs. Sushil Co. 2016 (4) TMI 987 - SUPREME COURT and also clarified by the Board Circular dated 1.8.2002 - demand of service tax on Cargo Handling Service for the period 16.8.2002 to 30.6.2003 is not sustainable in law. Time Limitation - HELD THAT - The entire demand is also barred by limitation because the show-cause notice was issued on 18.7.2009 proposing to demand service tax for the period from 16.8.2002 to 30.6.2003 and in the show-cause notice, there is no allegation of fraud, collusion, willful misstatement or suppression of fact with intent to evade payment of tax. Appeal allowed on merits as well as on limitation.
Issues:
1. Interpretation of the scope of Cargo Handling Service. 2. Applicability of service tax on stevedoring service at a minor port. 3. Limitation period for demanding service tax. 4. Bona fide belief of the appellant regarding service tax liability. Interpretation of the scope of Cargo Handling Service: The appellant provided stevedoring services at a port and was initially demanded service tax for the period before 1.7.2003 under the category of Cargo Handling Service. The appellant argued that their services did not fall under this category before the specified date. The appellant referenced the definition of Cargo Handling Service and taxable service under relevant sections of the Finance Act, 1994, along with a CBEC Circular defining Cargo Handling Service. Additionally, the appellant cited a Supreme Court judgment outlining conditions for a service to be considered as Cargo Handling Service. The Tribunal agreed with the appellant, ruling that the services provided did not qualify as Cargo Handling Service before 1.7.2003. Applicability of service tax on stevedoring service at a minor port: The appellant contended that their services at a minor port were not subject to service tax before 1.7.2003, based on a bona fide belief and subsequent amendments extending the levy of service tax to all ports. The Tribunal noted that the services rendered by the appellant at the minor port fell under the category of Port Service, not Cargo Handling Service, as clarified by a Board Circular and a Supreme Court judgment. The Tribunal found the demand for service tax on Cargo Handling Service before 1.7.2003 unsustainable and upheld the appellant's belief regarding the applicability of service tax at the minor port. Limitation period for demanding service tax: The appellant argued that the entire demand was barred by limitation since the show-cause notice was issued beyond the statutory period and did not allege fraud or suppression of facts. The Tribunal agreed, stating that the demand for service tax from 16.8.2002 to 30.6.2003 was time-barred as there was no evidence of fraudulent intent or suppression of facts by the appellant. Bona fide belief of the appellant regarding service tax liability: The appellant maintained a bona fide belief that service tax at the minor port was only applicable from 1.7.2003 onwards, supported by subsequent amendments and clarifications. The Tribunal acknowledged the appellant's genuine belief and compliance with service tax regulations from the specified date, leading to the setting aside of the impugned order based on merit and limitation.
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