2019 (6) TMI 514 - AT - Service Tax

Tribunal limits service tax levy on coal transfer, citing Supreme Court ruling

The Tribunal upheld the levy of service tax on the appellant for mechanical transfer of coal into railway wagons, classifying it under 'Cargo Handling ... Classification of services - Cargo Handling Service or not - Hiring of pay loaders for mechanical transfer of finished coal from Railway siding inside mines into Railway Wagons - HELD THAT:- The classification of the identical activity in respect of coal mines, have been the subject matter of several decisions. In the case of GAJANAND AGARWAL VERSUS COMMISSIONER OF CENTRAL EXCISE, BBSR [2008 (6) TMI 163 - CESTAT KOLKATA] , the Tribunal has taken the view that the activity of loading of coal into Railway wagons for onward transportation of coal to the area outside the mines, will be liable for payment of service tax under the category of “Cargo Handling Service”. Appeal allowed - decided in favor of appellant. Issues:1. Whether the appellant's activity falls under 'Cargo Handling Service' for service tax liability.2. Whether the extended period of limitation under Section 73 is justified for demanding service tax.3. Whether the demand for service tax should be restricted to the normal time limit.4. Whether the benefit of limitation should be extended to the appellant.Issue 1:The appellant's activity of mechanical transfer of coal at railway sidings into wagons for two companies was under dispute regarding its classification under 'Cargo Handling Service.' The appellant argued that the activity did not meet the criteria set by the Hon'ble Supreme Court in a specific case. However, based on previous decisions, the Tribunal found that loading coal into railway wagons for transportation outside the mines falls under 'Cargo Handling Service,' as specified in Section 65(23) read with Section 65(105) of the Finance Act, 1994. The Tribunal upheld the levy of service tax on merit, following its previous decisions in similar cases.Issue 2:Regarding the extended period of limitation under Section 73 for demanding service tax, the appellant contended that the Department had prior knowledge of the issue, as evident from previous show-cause notices. Citing a Supreme Court case, the appellant argued that the demand for service tax should not be justified under the extended period of limitation. However, the Department justified the impugned order, stating that the appellant's delay in providing details led to the delayed issuance of the show-cause notice. Ultimately, the Tribunal found in favor of the appellant based on the Supreme Court decision in the case of Nizam Sugar Factory, settling the issue of limitation in favor of the appellant.Issue 3:The appellant requested that if any demand for service tax were to be upheld, it should be restricted to the normal time limit. The Tribunal, following its previous decisions, restricted the levy of service tax to the normal time limit, considering that the levy under 'Cargo Handling Service' was in its early stages during the disputed period. Additionally, penalties under various sections of the Finance Act were waived based on Section 80 of the Finance Act, 1994.Issue 4:Given that no demand survived within the normal time limit, the Tribunal set aside the impugned order and allowed the appeal. The decision was made based on the settled issue of limitation in favor of the appellant and the classification of the appellant's activity under 'Cargo Handling Service' for service tax liability.This detailed analysis of the judgment highlights the key legal arguments, precedents, and decisions that influenced the Tribunal's ruling on each issue involved in the case.