2024 (11) TMI 1231 - AT - Service Tax

Demand of service tax was confirmed under Cargo Handling Service along with interest and penalty - whether the services provided by the appellant to WCL are taxable under the category of Cargo Handling Service or Transportation of Goods by road service ? - HELD THAT - The primary nature of work awarded to the appellant was transportation as is evident from the valuation of the work, which is attributable mainly to the transportation activities and the very limited portion is towards mechanical loading of coal. The work orders of WCL shows the combined rate for loading and transportation of coal as well as work orders for only loading coal in the wagons. It has been pointed out that the element of loading in combined contract is merely 5% and the remaining 95% of valuation is attributable towards transportation activities. Therefore, logically the primary and the dominant nature of work is transportation within the mining area and would, therefore, not fall under Cargo Handing Service . We are of the view that the Commissioner was not justified in holding that the appellant had undertaken the activity of Cargo Handling Service . In fact, the Commissioner while passing the impugned order had not adjudicated the issue within the four corners of the remand order passed by the Tribunal. In view of the issue having been settled as referred above, the impugned order is unsustainable and is hereby set aside. The appeal is accordingly allowed.

Summary

Issues:
Challenge to order confirming service tax under "Cargo Handling Service" for transportation of coal within mining area.

Analysis:
The appellant provided Goods Transport Agency service to a mining company within a mining area. The service was for transportation of coal from bunkers to weighbridges and unloading. Initially, service tax demand was confirmed, but the appeal was allowed by CESTAT for re-verification. Upon re-verification, the demand was confirmed again, leading to the current appeal.

The main argument by the appellant was that the service provided was primarily transportation of coal, with loading and unloading being incidental. They contended that the service should be classified under "Goods Transport Agency Service" instead of "Cargo Handling Service." The appellant highlighted that the mining company was registered under GTA and paid service tax for the services received.

The Tribunal noted that the issue of whether the services provided fall under "Cargo Handling Service" or "Transportation of Goods by road service" has been settled in previous decisions. The Revenue representative also acknowledged that the issue had been addressed in various Tribunal decisions, including a recent one where it was concluded that the service falls under "transportation of goods by road service."

Referring to previous Tribunal decisions, it was established that the primary nature of the work was transportation, with loading and unloading being incidental. The Tribunal emphasized that the valuation of work orders predominantly attributed to transportation activities, with a minimal portion for loading. Therefore, the dominant nature of the work was transportation within the mining area, not cargo handling service.

Consequently, the Tribunal held that the Commissioner was unjustified in categorizing the appellant's activity as "Cargo Handling Service." The impugned order was set aside as it did not adhere to the Tribunal's remand order and failed to consider the settled issue regarding the classification of the service. The appeal was allowed in favor of the appellant.