2023 (6) TMI 1372 - AT - Service Tax

Composite contract for shifting materials within steel works constitutes transportation service, loading/unloading incidental activities only

M/s. N. Kumar & Co., Versus Commissioner of CGST & Central Excise, Jamshedpur

CESTAT Kolkata held that appellant's composite contract for shifting materials within steel works constituted transportation service as primary activity, ... Classification of service - transportation service or Cargo Handling Service? - transportation of materials, loading and unloading there for while shifting of the various materials within the said Steel Works and other incidental work related thereto - HELD THAT:- The Appellant has undertaken the work of shifting of various materials within the Tata Steel Works factory. A perusal of the contract revealed that it was a composite contract in which Transportation was the primary service. Loading, unloading and stacking of the cargo was incidental to the main work. Accordingly, service tax was payable on Transportation service on the total value received. However, the Appellant has paid service tax under the category of Cargo Handling Service, towards the receipts made for loading, unloading and stacking work. Just because they have paid service tax under Cargo Handling Service for the unloading, loading and stacking services, it does not mean that the Appellant were liable to pay service tax under cargo Handling Service on the total value. The Appellant is not liable to pay service tax under the category of Cargo Handling Service'. Hence, the demand confirmed in the impugned order is not sustainable. Since demand of service tax is not sustainable, the demand of interest and imposition of penalty is also not sustainable. The impugned order set aside - appeal allowed. Issues Involved:1. Classification of services provided by the Appellant.2. Liability to pay service tax under 'Cargo Handling Service'.3. Applicability of extended period for issuing Show Cause Notice.4. Imposition of interest and penalties.Summary:1. Classification of Services Provided by the Appellant:The Appellant, engaged in shifting materials within Tata Steel Ltd.'s Jamshedpur factory, classified their services into two categories: 'Cargo Handling Service' for loading and unloading, and 'Goods Transportation Agency Services by Road' for transportation within the factory premises. The Appellant argued that transportation was the primary service, with loading and unloading being incidental, and thus, service tax was not payable under 'Cargo Handling Service' for the entire value received.2. Liability to Pay Service Tax under 'Cargo Handling Service':The Commissioner of Central Excise and Service Tax, Jamshedpur, issued a Show Cause Notice demanding service tax for the period April 2005 to March 2010, alleging short payment under 'Cargo Handling Service'. The adjudicating authority confirmed this demand. However, the Tribunal observed that the essence of the contract was transportation, with loading and unloading being incidental. Thus, the Appellant was not liable to pay service tax under 'Cargo Handling Service' for the entire value.3. Applicability of Extended Period for Issuing Show Cause Notice:The Tribunal noted that the Show Cause Notice was issued beyond the normal period of limitation. Given that the issue involved interpretation of law and was a disputable matter, the invocation of the extended period was not sustainable. The demand was thus not sustainable on the grounds of limitation.4. Imposition of Interest and Penalties:Since the demand for service tax was found unsustainable, the Tribunal also set aside the imposition of interest and penalties. The impugned order was thus set aside, and the appeal filed by the Appellant was allowed with consequential relief as per law.Conclusion:The Tribunal held that the Appellant was not liable to pay service tax under 'Cargo Handling Service' and set aside the demand, interest, and penalties imposed by the lower authority. The appeal was allowed in favor of the Appellant.