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TMI Blog2024 (4) TMI 1038X X X X Extracts X X X X X X X X Extracts X X X X ..... ce and service tax have been rightly discharged by the recipient Ultratech Cement Ltd under Reverse Charge Mechanism. Thus, the confirmation of demand on the appellant is bad and accordingly set aside. The demand in terms of the above decision which is squarely on the same set of facts have been set aside both on the merits and also limitation. In case of Srinivasa Transports [ 2014 (6) TMI 205 - CESTAT BANGALORE] Bangalore bench has held the appellant has provided labour for undertaking miscellaneous jobs and payment has been made to the appellant based on number of man-days involved. This service also would not come under the category of cargo handling service. Therefore, clubbing all the activities undertaken by the appellant under Cargo Handling Service and levying Service Tax under the said category cannot be sustained in law. The adjudicating authority has to examine the individual activities carried out by the appellant and then classify the same, considering the definitions provided in the law, which has not been done in the present case. Therefore, the matter has to go back to the adjudicating authority for fresh consideration. The impugned order cannot be sustained and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment the scope of work is as under:- B. The transporter is desirous to act as one of the Secondary Transporter of the company to perform company s transportation services intrastate and interstate as specified in this agreement. 2.5 Show cause notice dated 16.07.2018 was issued alleging that the Appellant had not discharged Service Tax on the incomes shown under the head Freight Reimbursed and Miscellaneous Expenses Reimbursed in their Balance Sheet as well as in their ledger with respect to Freight Claim Miscellaneous Claim during the financial year 2012-13(From October 2012) to 2016-17. 2.6 After the due process of law, demand of service tax amounting to Rs.2,72,92,383/- as proposed in the show cause notice was confirmed alongwith applicable interest on Freight Reimbursed Miscellaneous Expense Reimbursed received from M/s UTIL. Penalty of equal amount was also imposed under Section 78 of the Finance Act, 1994. Hence, the present appeal before the Tribunal. 3.1 We have heard Shri Dharmendra Kumar, Chartered Accountant for the Appellant and Shri Sandeep Pandey, Authorized Representative for the revenue. Appellant acted as a Pure Agent in terms of Rule 5(2) of Service Tax (Determina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/S UTCL. Regarding the freight reimbursed the department is of the view that whole activity carried out by the Noticee is connected with Clearing Forwarding Agent Service. Mere segregating the agreements, the activity of making arrangement of secondary transportation can not be treated as GTA service. While regarding the miscellaneous expense reimbursed , the department is of the view that these reimbursements will be part of taxable value while paying service tax by the Noticee against the service of clearing and forwarding agent service provided to M/S UTCL. However, the contention of the Noticee is that the freight reimbursement is the amount received for providing GTA Services to M/s UTCL and M/S UTCL are paying service tax under reverse charge mechanism while regarding miscellaneous expense reimbursement , the Noticee has pleaded that this reimbursement is on account of amount paid to railways in respect of demurrage / wharfage. First of all, I would like to discuss the facts present in the case before me. The Noticee enters into two agreements with M/s Ulta Tech Cement Limited (M/S UTCL) (i) Handling Agent Agreement (ii) Transport Agreement. By the Handling Agent Agreement, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransportation under GTA Service but the act of the Noticee is more acquiescent than of a goods transport agent. The Noticee has submitted a demand draft of ₹57,954/- in the name of M/S UTCL as security deposit. The Noticee is fully responsible for safety and good condition of the consignments from the time of collection of goods from railways siding till the actual delivery of the goods. Further, the Noticee is also required to submit bills on fortnightly basis alongwith copy of GCN / LR / Delivery Note and full details of consignment transported outward and only thereafter, the payments have been released to the Noticee. Moreover, the fixed charges were mentioned in Annexure-l of transport Agreement for different destination while the service charges i.e. ₹12/- per metric is mentioned in Annexure-I of Handling Agent Agreement which means these two agreements are well connected to each other. All these activities precisely cover by Clearing Forwarding Agent Service The Noticee has entered into two separate agreements for the whole activities of executing the work such as unloading of wagons to the platform, loading the goods from platform to trucks, transportation of go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut by the Noticee for the said consideration (Freight Reimbursed) is found to be connected with the clearing forwarding agent service. Further, Vivisection of a single composite service is not permissible under the law. In this regard, want to place the reliance of the case of SINGH TRADING COMPANY VS. COMMISSIONER CENTRAL EXCISE, BHOPAL 2018(9) G.S.T.L.201(Tri.-Del.) wherein the Tribunal has stated Since loading and unloading, handling and transportation of goods upto the destination was an integral part of C F service, we are of the view that transportation charges alone cannot be bifurcated and charged separately to service tax under GTA service. Further, it is evident from the facts of the case that the appellant does not satisfy the condition of being considered as Goods Transport Agency, Consequently, we are of the view that the transportation charges received should form part of the consideration for C F service. MISCELLANEOUS EXPENSE REIMBURSED Now regarding miscellaneous expense reimbursement , the Noticee has pleaded that this reimbursement is on account of amount paid to railways in respect of demurrage / wharfage The word Demurrage Wharfage is not defined in Service Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the taxable service. Therefore, I am very much clear that, if any, expenditure incurred by the Noticee is in the capacity of pure agent of M/S UTCL, then it will not be the part of taxable value. On precise reading of the Rule 5(2) of Determination of Value Rules, 2006, any service provider will be considered acting as pure agent of service recipient if they fulfill all the eight conditions, There are the following main ingredients to be a service provider as pure agent of recipients of service;- (i) There is an agreement between service provider (the Noticee) and service receiver (M/S UTCL) to act as pure agent of service receiver. (ii) The service provider (the Noticee) neither intends nor hold any title of services so procured or provided as pure agent. (iii) The service provider (the Noticee) does not use such goods or services so procured. (iv) The service provider (the Noticee) receives only the actual amount incurred to procure such goods or services I draw attention to the fact that the Hon ble Supreme Court in the case, of Sharif-ud-Din Vs. Abdul Gani Lone AIR 1980 SC 303 had held as under:- The difference between a mandatory rule and directory rule is that while the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble Apex Court- 2004(178) ELT 55 (55) while allowing the appeal had held as under:- 25. In our view, the failure to comply with the requirements renders the writ petition filed by the respondent liable to be dismissed. While mandatory rule must be strictly observed, substantial compliance might suffice in the case of a directory rule. 26. Whenever the statute prescribes that a particular act is to be done in a particular manner and also lays down that failure to comply with the said requirement leads to severe consequences, such requirement would be mandatory. It is the cardinal rule of the interpretation that where a statute provides that a particular thing should be done, it should be done in the manner prescribed and not in any other way, It is also settled rule of interpretation that where a statute is penal in character, it must be strictly construed and followed Since the requirement, in the instant case, of obtaining prior permission is mandatory, therefore, non-compliance of the same must result in cancelling the concession made in favour of the grantee-the respondent herein. But in the present case, the Noticee has failed to prove that they have received the actual amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f clear view that the Noticee was required to include the amount received from M/S UTCL under the head of freight reimbursed miscellaneous expense reimbursed while paying service tax under clearing forwarding agent service. 4.3 The two agreements have been perused by us very critically and we find that there is no interlinkage between the two, the first agreement was exclusively for C F agent service while the second agreement was for the transportation of goods. 4.4 It is the case of the Appellant that in respect of the transport services as per the transport agreement, the same was segregated in two parts. First part was actual transport cost on which UTCL paid service tax under reverse charge mechanism [RCM] and the other part is service charges for providing transportation services i.e. margin over and above transportation cost ,on which Appellant is paying the service tax. Appellant being a proprietor and is engaged in providing Goods Transport Service to UTCL, which a body corporate, and accordingly as per Notification No.30/2012-ST dated 20.06.2012 read with Section 68(2) of the Finance Act, 1994, M/s UTCL, being the service receiver was liable to pay the service tax under R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between Ultratech Cement Ltd and M/s S S Enterprises (proprietor Gunesh India private Ltd). Under the clause, scope of work contained in para 2 of the agreement, it is provided that the appellant-assessee shall call the company officials/depot incharge every day to receive instructions regarding arrival of Rakes at the railway siding situated at Kota RH and also collect information regarding arrival of rakes from the Railway Office. The appellant is also required to track the consignment from the railway online system. Further, the appellant is required to arrange to unload the cement from the rake and to clear the consignments from the railway siding within the free time allowed by the Railways without incurring any demurrage/wharfage etc. Further, the appellant is required to co-ordinate for placement of loaded trucks from railway platform/goods/godowns to the various godowns on regular basis. The list of such godowns is as per the approved freight list. In case of emergency, as per the instructions of the company, the trucks/vehicles carrying the consignment can be diverted to other specified godowns and the appellant shall be obliged to honour such instructions. The appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not attracted and have been wrongly invoked by revenue. 10. We also find that the rulings relied upon by the Revenue are not relevant and are distinguishable in the facts and circumstances of this case. 23. We further find that the facts herein are similar to the facts in the case of Jain carrying Corporation v. CCE 2014-TIOL-3069-CESTAT, Delhi, wherein the assessee entered into a contract for providing 3 different services:- The first service was cleaning of mining area by undertaken various activities which would get covered under the head site formation and clearance, excavation and earth moving and demolishing services. The second category of service is merely for transportation of gypsum from one place to the railway station and would appropriately fall under GTA service. The third service required assessee to undertake activity of loading of gypsum into railway wagons/rakes by using mechanical loaders. Revenue wanted to classify the aforementioned three services under 'cargo handling service'. This Tribunal held that the contract may be a composite contract but three services were clearly mentioned separately with separate rates for the same as indicated against each ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns that the property in the said good was transferred only during execution of works contract service. Therefore, there is a clear distinction between goods property of which is transferred prior to execution of Works Contract Service and the property in the goods transferred during the execution of Works Contract Service. In view of the clear provision under Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 as amended by Notification No. 23/2009-S.T., dated 7-7-2009 the value of the goods, property of which belongs to service recipient before execution of Works Contract Service, shall not be included in the gross amount of Works Contract Service. 6.9 The revenue s contention is that appellant being common for supply of goods and provider of Works Contract Service cannot enter into separate contract and in such case the one composite contract is not divisible. On this issue much water was flown. In the various courts have given judgments on this issue some of the judgment cited : Bhagwandas Goverdhandas Kedia v. Girdharilal Parshottamdas Co., AIR 1966 SC 543 Tata Cellular v. Union of India, (1994) 6 SCC 651. 6.10 From the above judgments it can be seen that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed the principle as follows : .. Secondly, a transaction which, on its true construction, is of a kind that would escape tax, is not taxable on the ground that the same result could be brought about by a transaction in another from which would attract tax.. 6.13 From the above judgment it is clear that even if it is contented that due to two separate contracts there is a shortfall in payment of tax that itself cannot be a reason to reject the concept of two separate contract legally entered into between two parties. Therefore the revenue's contention related to this is also not sustainable. 4.7 In case of Srinivasa Transports [2014 (34) STR 765 (T-Bang)] Bangalore bench has held as follows: 7. As regards the demand of Rs. 1.05 crore (approx) under the category of cargo handling services, the contract entered into by the appellant with M/s. RINL is for handling and internal transportation of stores materials within the Visakhapatnam Steel Plant site. The scope of the work included handling and internal transportation of stores materials such as plant, machinery, equipments, etc. at the plant site including crushing of coke breeze meant for Visakhapatnam Steel Plant, job contra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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