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TMI Blog2008 (6) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... nty-one crore seventy- four lakh seventy-eight thousand nine hundred and three only) under Section 73(2) of the Finance Act, 1994, followed by equal amount of penalty under Section 78 of the said Act. (ii) Penalty @ Rs. 100/- (Rupees one hundred) per day under Section 76 till discharge of service tax liability. (iii) Penalty of Rs. 100/- (Rupees one hundred) per day for each failure to comply with the law till 15-7-2001 imposed u/s 77 and Rs. 1000/- thereafter for such failure. (iv) Penalty of Rs. 500/- u/s 75A of the Act. 2.1 On the basis of investigations made and intelligence gathered by Revenue, Show Cause Notice (SCN) dated 19-10-2004 relating to the period 1-9-1999 to 31-3-2004 was served on the Appellant charging that services provided by the Appellant to its clients fall under the class of "clearing and forwarding" for which the value of taxable service provided shall be liable to service tax under the Act. Further charge was that for the breach of law, penalty and interest were leviable under the law. Granting opportunity of hearing to the Appellant and on consideration of different agreements executed between the Appellant and its clients as well as materials on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... low up with the Railways for allotment of wagons against sanctioned programs and try to avoid the long gap in the allotment of wagons. As soon as the wagons are allotted by Railways, the Principals are informed accordingly; (vi) To liaison with Railways authorities for placement of wagons at the colliery siding for loading of coal and coordinate with the local rail way yards for supply of inspected wagons to avoid or minimize the Railway claims on account of detachment of wagons during transit; (vii) To supervise coal loading and to ensure dispatch of quality coal, as per as possible. In case of quality complaint KCT have to take up the matter suitably with the respective authority of Coal Companies for necessary corrective steps; (viii) To supervise the weighment of each and every wagon at the weighbriedge and to take all corrective steps to ensure the quantity of the coal; (ix) To undertake all such other Acts/works to ensure proper planning and movement of coal rakes as per the requirements of their Principals; (x) To monitor the movement of loaded wagons/rakes; (xi) To do all the liaison job on behalf of their Principals including the refund/claims till the claims a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant by the learned Adjudicating Authority discarding the plea of taxability thereof under cargo handling service in absence of any evidence. Learned Adjudicating Authority also found that the Appellant sought registration with the Cuttack 1 division on 1-10-2003 and returns submitted being relatable to October, 2005 to March, 2006 and not to the period under dispute, the Appellant was liable to Service Tax under the class 'clearing and forwarding services'. 2.7 The fifth issue relating to ascertainment of liability was held to be correct. 2.8 The sixth issue relating to grant of benefit of cum-duty value in the event of taxation of the consideration received towards providing service was decided holding that the Appellant was entitled to the benefit and accordingly tax liability was determined giving such concessions. 2.9 The plea of limitation under issue No. 7 was held to be untenable in view of the past liability of the Appellant arose for the reason that position of law was not ambiguous during the period under dispute in view of the clarification issued by C.B.E.C. on 10-12-2003 and that does not restrain from invoking longer period of limitation. 2.10 The eigh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Coal in relation to TNEB contract consists of composite operation such as supervising/monitoring loading of coal into wagons at Talcher, unloading of coal from railway wagons at the stock-yard within the Paradip Port, storing of coal into the dumps of TNEB at the port, intra-port transportation from stock-yard to the wharf, stevedoring, shore handling etc. This activity is limited only for TNEB, and that too in relation to Paradip Port only. (B) Notification bearing F. No. B.43/7/97-TRU dated 11-7-97 of the Ministry of Finance read with Trade Notice No. 8/97-ST dated 11-7-97 issued by Mumbai Commissionerate-I and Trade Notice No. 59/99 dated 4-10-99 of that Commissionerate, Circular No. 39/2/2002 dated 20-2-2002, paragraph 10 of Service Tax Circular/Order No. 2/1/2002-ST dated 24-4-2002 throw light that essential characteristic of clearing and forwarding service is that such service can be said to have been provided only if the service provider and service receiver are in the capacity of agent and principal. The clearing and forwarding agent carries out all activities in respect of goods, right from the stage of their clearances from the premises of the principal to its stora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Explanation was added to the said sub-clause (iv) with effect from 16-6-2005 and similar such service having been provided prior to this date, the Appellant is not liable to tax as clearing and forwarding Agent: "Explanation. - For the removal of doubts, it is hereby declared that for the purposes of this sub-clause, 'inupts' means all goods or services intended for use by the client". (F) The Appellant having been denied to be registered under the class of provision of service of "business auxiliary" w.e.f. 16-6-2005 in terms of order dated 11-9-2007, the Hon'ble High Court of Court (sic) by order dated, 11-10-2007 in W.P No. 1146/07 directed the learned Commissioner of Service Tax to consider the case of the Appellant granting opportunity of hearing. Although hearing was granted, the said Authority again by order dated 27-11-2007, arbitrarily and unreasonably confirmed that the Appellant shall fall under clearing and forwarding under the class "clearing and forwarding agent" under Section 65(25) of the Finance Act, 1994. Against such order, the Appellant's Writ Application in WP No. 1359/07 is pending before the Hon'ble High Court of Calcutta. However, as an interim meas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Clearing Forwarding Agent, as defined in Section 65(25) read with Section 65(105)(i) of Chapter V of the Finance Act, 1994, the Respondent service tax authorities were justified in law in holding that the Petitioner No. 1 was engaged in rendering services to its clients in the nature of 'Clearing Forwarding Agent', and not in the nature of services falling within the category of 'Business Auxiliary Service', as defined in Section 65(19) read with Section 65(105)(zzb) of the said Act?" 3.2 It was submitted by the learned senior Counsel that Some of the agreements which are subject matter of Writ Petition under Annexure P-1 to P-11 are also involved in the impugned assessment. Therefore when proper interpretation and construction of the nature of activity is in question in the Writ Petition, the Appellant should not be called upon to make pre-deposit for hearing of its Appeal. The case of the Appellant is that Revenue has not taken any step to file counter-affidavit in W.P. No.1359/07 to explain its stand for Classification of the service provided by the Appellant for which the interim order passed by the Hon'ble High Court on 18-12-2007 directed the petitioner to continue to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding barred by limitation is unsustainable. The Appellant for such plea relied on the decision of the Hon'ble High Court. The decisions of the Hon'ble Supreme Court in Continental Foundation Joint Venture Holding v. CCE - 2007 (216) E.L.T. 177 (S.C.) = (2007) 10 SCC 337 (SC), CCE v. Ballarpur Industries Ltd . - 2007 (215) E.L.T. 489 (S.C) = (2007) 8 SCC 89, 99 (SC), Cosmic Dye Chemical v. CCE - 1995 (75) E.L.T. 721-723 (S.C.), Chamundi Die Cast Pvt. Ltd. v. CCE - 2007 (215) E.L.T. 169 (S.C.), CCE v. Chemphar Drugs Liniments - 1989 (40) E.L.T. 276 (S.C.), Pushpam Pharmaceuticals Co. v. CCE - 1995 (78) E.L.T. 401, 403 (S.C.), Anand Nishikawa Co. Ltd. v. CCE - 2005 (188) E.L.T. 149 (S.C.), Densons Pultretaknik v. CCE - 2003 (155) E.L.T. 211 (S.C.) = (2003) 11 SCC 390. 3.6 He also submitted that penalty is not leviable for no mala fide of the Appellant brought to record and the levy all along being in the legal debate, whether the nature of services provided by the Appellant shall be belonging to the class of clearing and forwarding agent or business auxiliary service, the penalty levied is also unjust and uncalled for. Denial of liability by the Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to comply with the law has also rightly faced consequence of law by a reasoned order. The case being a breach of law and there was suppression of material fact to evade tax, invocation of longer period by SCN was justified. The proceeding was thus not at all time-barred. The decisions relied upon by the Appellant do not help it in view of elaborate reasons stated by learned Adjudicating Authority and statutory provisions. Therefore pre-deposit of the demand would be justified for hearing Appeal. 5.1 Heard both sides and perused the record and considered the citations made by them. 5.2 Record reveals that investigation brought out material facts to light for issue of Show Cause Notice (SCN). The Appellant executed contracts with various clients as per terms of agreement argued by both parties. Summary of scope of activity of all contracts has been depicted by the learned Commissioner at page 28 of order of adjudication and on consideration of pleas of appellant held that the services provided by it were clearing and forwarding. It has sought registration under the class of "Business Auxiliary Service" under the Act w.e.f. 15-6-2005 (which has been denied by Registering Aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the principal; (e) Maintaining record of the receipt and dispatch of the goods and the stock available on the warehouse; (f) Preparing invoices on behalf of the principal. Clearing forwarding operations as normally understood by trade and commerce appears to have been understood by Board's Instruction as above. Thus such operation has not only taken into its fold all such activities expected to be carried out by an agent on behalf of his principal to make or ensure that goods manufactured or traded by that principal to reach his buyer or consignment Agent from his premises or elsewhere, but also the activities of making or ensuring goods to reach from a manufacturer/trader to the principal of such Agent, in any manner, is covered by the levy. All services in relation to such act provided directly or indirectly, incidental or ancillary to achieve the main object of clearing of goods and or forwarding thereof, in any manner, attract incidence of levy. It is not necessary that the goods should be in the custody or possession of the Agent while carrying out aforesaid operations. But it is such service activity which enables the goods to reach its destination and may be through a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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