2024 (12) TMI 1195 - AT - Service Tax

Classification of services - Cargo Handling Service or not? - activity of loading of Lime Stone into tippers dumpers at mines and from railway plots into railway wagons using front end loaders - Cum-tax benefits in terms of provisions of section 67 (2) of Finance Act 1994 - Extended period of limitation - penalty. Classification of services - HELD THAT - The issue about movement of lime stone/coal and rejects in the mining area is no more res-integra to the effect that the activity does not involve Cargo Handling Service as it was held by this Tribunal Kolkata Bench in the case of SAINIK MINING ALLIED SERVICES LTD. VERSUS COMMR. OF C. EX. CUS. ST 2007 (11) TMI 90 - CESTAT KOLKATA . Hon ble Apex Court also in the case titled as CHOWGULE CO. PVT. LTD. VERSUS UNION OF INDIA 1980 (11) TMI 61 - SUPREME COURT has held that process of extraction of ores from mines washing screening crushing in the crushing plant and stacking at the mining site all are covered under the Mines Act 1952 hence cannot be called as Cargo Handling Service . The CBEC Circular No.232/2/2006 dated 12.11.2007 clarified that the services which are liable to tax under this category ( Cargo Handling Service ) are the services provided by cargo handling agencies who undertake the activity of packing unpacking loading and unloading of goods meant to be transported by any means of transportation namely truck rail ship or aircraft. Well known examples of cargo handling service are services provided in relation to cargo handling by the Container Corporation of India Airport Authority of India Inland Container Depot Container Freight Stations. This is only an illustrative list. There are several other firms that are engaged in the business of cargo handling services. Thus the activity rendered by the appellant to M/s.RSMML cannot be called as Cargo Handling Service . Otherwise also the Cargo Handling Services were made taxable w.e.f. 01.06.2007. The period in dispute/ period of demand is the period prior the said date (27.05.2005 to 12.04.2006). Hence the demand has wrongly been confirmed by the Department. Extended period of limitation - Penalty - HELD THAT - It has been brought to the notice that there were several circulars got issued by CBEC with respect to explaining scope of Cargo Handling Services . One has been already discussed above and the another was of the year 2002. The series of the Circulars created doubts and confusions. It has been settled by this Tribunal in the case of VISHAL TRADERS VERSUS COMMISSIONER OF CENTRAL EXCISE JAIPUR-I 2009 (11) TMI 137 - CESTAT NEW DELHI that when the question of interpretation caused confusion the intention to evade tax cannot be alleged.Penalty is also not impossible in such circumstances. Keeping in view the same and the fact that there is no specific allegation nor any proof about any positive act of the appellant which may amount to suppression /willful mis-statement that too with an intent to evade payment of service tax we hold that the department was not entitled to invoke the extended period of limitation. The entire period of impugned demand is beyond the normal period seen from the date of impugned Show Cause Notice. Hence the Show Cause Notice is held barred by time. Cum-tax benefits in terms of provisions of section 67 (2) of Finance Act 1994 - HELD THAT - The services provided in relation to security by the appellant are not taxable in terms of the definition as it stood prior to 18.04.2006. Due acknowledgement has been given to the fact that Service Tax on transportation activity has been paid by M/s.RSMML. Appellant is also held eligible for cum-tax benefits in terms of provisions of section 67 (2) of Finance Act 1994. The demand has been confirmed only by holding that the complete and proper details about the services and the taxable value were suppressed by the appellants. The order under challenge is set aside - appeal allowed.

Summary

Issues:
Assessment of liability for service tax on transportation services provided to a specific entity without registration. Determination of liability under 'Cargo Handling Service' and 'Security Agency Service'. Allegation of suppression of facts and invocation of extended period of limitation.

Analysis:

The appeal was filed against an Order-in-Appeal alleging non-payment of service tax by the appellant for services provided to M/s. Rajasthan State Mines and Minerals Limited. The Department contended that service tax of Rs.18,05,003/- was payable by the appellant under 'Cargo Handling Service' and 'Security Agency Service'. The appellant argued that since M/s. RSMML had paid service tax under reverse charge mechanism, they were not liable. The appellant also claimed that the services provided were incidental to mining operations and not taxable. The Commissioner (Appeals) confirmed the demand under 'Cargo Handling Service' but dropped the demand for 'Security Agency Service', reducing the liability to Rs.12,19,348/-.

The Tribunal analyzed the nature of services provided by the appellant and referred to precedents to determine if the activities constituted 'Cargo Handling Service'. It was established that the activities related to mining operations did not fall under the definition of 'Cargo Handling Service'. The Tribunal also cited CBEC Circulars to clarify the scope of 'Cargo Handling Service', emphasizing that the appellant's services did not qualify. As 'Cargo Handling Services' were taxable from 01.06.2007, the demand for the period prior to this date was deemed incorrect.

Regarding the invocation of the extended period of limitation, the Tribunal considered the appellant's plea of bonafide belief and confusion caused by conflicting circulars. It was held that there was no intent to evade tax, and the extended period of limitation was unjustified. The Tribunal also noted that the Commissioner (Appeals) acknowledged the payment of service tax by M/s. RSMML and granted cum-tax benefits to the appellant. The demand was upheld solely on the grounds of alleged suppression of details, which the Tribunal found unsubstantiated.

Ultimately, the Tribunal set aside the Order-in-Appeal, allowing the appeal in favor of the appellant. The decision was based on the finding that the services provided did not constitute 'Cargo Handling Service', and the invocation of the extended period of limitation was unwarranted. The Tribunal emphasized the lack of evidence supporting the suppression of details, leading to the dismissal of the demand.