2023 (4) TMI 213 - AT - Service Tax

Classification of services - cargo handling services or not - providing services of loading, supervisions, weighment and inspection and inter-carting services for the raw materials and finished goods within the factory premises of M/s Essar Steel Ltd. (M/s ESL) - whether the activity carried out by the Appellant for DTA and SEZ Unit of M/s Essar Steel Ltd. is taxable under the head of Cargo Handling Services and liable to service tax? - HELD THAT - From the definition of taxable service, it is clear that loading, unloading, handling of cargo for all modes of transport and any other service incidental to freight would be covered by the definition of cargo handling . The definition also very clearly specifies that mere transportation of goods will not be considered as cargo handling service. The definition itself clarifies that if the activity is only of transportation, then the said activity cannot be called as cargo handling service. Appellant s services only involved movement of goods within the factory premises of M/s Essar Steel Ltd. Further the activity undertaken by the Appellant did not involve any packing or unpacking. From the work order referred in the impugned matter it is also clear that Appellant were concerned only with the movement of material within the factory area of M/s Essar Steel. In the present matter appellant merely shifts goods within the plant area and were not carrying any cargo. The Tribunal has dealt with the identical issue in case of SAINIK MINING ALLIED SERVICES LTD. VERSUS COMMR. OF C. EX., CUS. ST 2007 (11) TMI 90 - CESTAT, KOLKATA related to transportation of coal within a colliery area where a demand under Cargo Handling Service was made against the contractors. The Tribunal in this case held that the dominant activities undertaken being primarily within a mine, the said activity is not taxable as Cargo Handling Service. In the present case too, the service provided for the authorized operation by the appellant to the SEZ based service recipient, demand of service tax is not sustainable - Appeal allowed.

Summary

Issues Involved:
1. Classification of services provided by the appellant.
2. Taxability of services provided to SEZ units.
3. Invocation of the extended period of limitation.

Summary:

Issue 1: Classification of Services Provided by the Appellant
The primary issue was whether the services provided by the appellant to M/s Essar Steel Ltd. (M/s ESL) were taxable under "Cargo Handling Services." The appellant argued that their services involved the movement of goods within the factory premises, which does not qualify as "cargo" under the Finance Act, 1994. They cited various judgments, including MODI CONSTRUCTION CO. VS. CCE, to support their contention that shifting goods within a factory does not fall under Cargo Handling Services. The Tribunal agreed, noting that the services provided by the appellant involved only the movement of goods within the factory premises and did not include any packing or unpacking. Therefore, the services could not be classified under Cargo Handling Services.

Issue 2: Taxability of Services Provided to SEZ Units
The appellant also contested the demand for service tax on services provided to SEZ units of M/s ESL. They argued that Section 26(1)(e) of the SEZ Act provides an exemption from service tax for services rendered to SEZ units for authorized operations. The Tribunal agreed, stating that services used for authorized operations in SEZs are exempt from service tax, irrespective of whether the services were rendered within the geographical limits of the SEZ. The Tribunal relied on the judgment in Norasia Containers Liner Vs. CCE, which supported the view that services rendered to SEZ units for authorized operations are exempt from service tax.

Issue 3: Invocation of the Extended Period of Limitation
The appellant argued that the extended period of limitation could not be invoked as the facts were within the knowledge of the Department since April 2007. They contended that mere non-filing of returns or non-registration is not sufficient to invoke the extended period; there must be evidence of deliberate and willful intent to evade duty. The Tribunal did not delve deeply into this issue, as they decided the matter on merit, setting aside the impugned order.

Conclusion:
The Tribunal set aside the impugned order, concluding that the services provided by the appellant did not qualify as Cargo Handling Services and that the services rendered to SEZ units were exempt from service tax. The appeal was allowed with consequential relief as per law.