2018 (9) TMI 836 - HC - Service Tax

Court rules services at Container Freight Station as 'Storage and Warehousing' taxable, not 'Cargo Handling.' Appeal dismissed.

APM Terminals India Pvt. Ltd. Versus Commissioner of Central Excise, Navi Mumbai & Anr.

The High Court upheld the classification of services provided at the Container Freight Station as 'Storage and Warehousing' rather than 'Cargo Handling,' ... Maintainability of appeal - Classification of service - Container Freight Station - Storage and warehousing services or Cargo handling services? - Scope of Cargo Handling Services - whether the consideration which is received under the head “Cargo Handling” services is in fact consideration received for services classifiable under “Storage and Warehousing” services as contended by the Revenue? Held that:- In view of Section 35G(1) of the Act which specifically prohibits an appeal being entertained by this Court, if it is an order of the Tribunal relating amongst other things to the determination of any question having arisen on account of “rate duty” or the “value of goods” for the purposes of assessment - the appeal is not maintainable. The contention of the Appellant that Section 35G of the Act, has no application to the Finance Act, 1994 is on the basis of Section 35E of the Act is not referred to in Section 83 of the Act. This is so as Section 83 of the Finance Act, 1994 only makes reference to such provisions of the statute, which are in force. In fact, it specifically refers to Section 35G of the Act. Thus, we find no merit in the above submission. This appeal is not maintainable before this Court and the remedy, if any, to the appellant is to file an appeal before the Hon'ble Supreme Court under Section 35L(1)(b) of the Act - appeal disposed off. Issues Involved:1. Classification of services as 'Cargo Handling' or 'Storage and Warehousing.'2. Legislative intent regarding taxability of export cargo services.3. Invocation of extended period of limitation.Issue-wise Detailed Analysis:1. Classification of Services:The primary issue in this case revolves around whether the services provided by the appellant at the Container Freight Station (CFS) should be classified under 'Cargo Handling' services or 'Storage and Warehousing' services. The appellant contended that the services rendered, which included keeping, storing, and stuffing export cargo, should be classified under 'Cargo Handling' services and thus be exempt from tax as they were in the course of export. However, the Tribunal held that these services fell under 'Storage and Warehousing' services, making them taxable. The High Court supported this view, emphasizing that the nature of the services provided at the CFS was indeed storage and warehousing, which is distinct from cargo handling.2. Legislative Intent and Taxability:The appellant argued that taxing the services related to export cargo would frustrate the legislative intent of not taxing export services. The High Court, however, noted that the core issue was the classification of services. Only after determining the correct classification could the taxability of the services be addressed. The Court referenced the Supreme Court's decision in Navin Chemicals Mfg. & Trading Co. Ltd. Vs. Collector of Customs, which clarified that classification issues directly relate to the rate of duty or value of goods for assessment purposes. Thus, the Court concluded that the primary issue was indeed classification, not the legislative intent regarding export services.3. Extended Period of Limitation:The appellant also challenged the invocation of the extended period of limitation for the demand notice, arguing that the Tribunal had dropped penalty proceedings under Section 78 and acknowledged that facts had been declared. The High Court did not delve deeply into this issue, as the primary focus was on the classification of services. However, it implicitly supported the Tribunal's decision, which had upheld the classification under 'Storage and Warehousing' services, thereby justifying the extended period of limitation.Jurisdictional and Procedural Considerations:The High Court addressed a preliminary objection regarding its jurisdiction to entertain the appeal under Section 35G of the Act. The appellant argued that the issue was not about classification but about the taxability of export services. The Court, however, clarified that the jurisdiction to entertain an appeal is determined by the nature of the order passed by the Tribunal. Since the Tribunal's order related to the classification of services, which falls under the determination of the rate of duty or value of goods for assessment purposes, the High Court concluded that it lacked jurisdiction to entertain the appeal. The Court referenced the Supreme Court's interpretation in Navin Chemicals, which established that classification issues are directly related to the rate of duty.Conclusion:The High Court dismissed the appeal, directing the appellant to seek remedy before the Supreme Court under Section 35L(1)(b) of the Act, as the issue at hand was fundamentally about the classification of services, which falls outside the jurisdiction of the High Court under Section 35G. The appeal was disposed of accordingly.