2023 (10) TMI 996 - AT - Service Tax

Appeal Successful: Tribunal Overturns Service Classification, Dismisses Penalties Due to Lack of Evidence of Fact Suppression

The Tribunal set aside the impugned order, allowing the appeal filed by the Appellant. It found the classification of services under 'Cargo Handling ... Classification of services - Cargo Handling Service or Tour Operator/Rent-a-Cab service? - services of transportation of coal to Eastern Coal Field (ECL), at Ukhra, Khandra and Bankola area from the Mines area to Railway Siding - Demand of service tax on Hiring of Vehicle Service - demand under Rent-a-Cab Operator service - Demand raised based on the Balance Sheet figures only. Classification of services - HELD THAT:- The Appellant has been provided the services of transportation of coal for Eastern Coal Field (ECL) from the Mines area to Railway Siding. The Work Orders received by them indicate that the primary activity is transportation of coal. All other activities undertaken are incidental or ancillary to transportation. Board has clarified the issue vide Circular No. 104/07/2008-S.T. dated 06.08.2008, wherein it has been clarified that the service rendered under such composite contract would be classifiable as ‘GTA service’ only. This view has been taken by this bench in in the case of M/S MAA KALIKA TRANSPORT PRIVATE LIMITED VERSUS COMMISSIONER OF CGST & CENTRAL EXCISE, ROURKELA, ROURKELA [2023 (7) TMI 435 - CESTAT KOLKATA]. The recipient has agreed to pay service tax as per the work order. Thus, by following the Board Circulars and the decision cited, it is held that the service rendered by the Appellant in this case is GTA service and hence the demand confirmed in the impugned order under ‘Cargo Handling Service is not sustainable. Demand of service tax on Hiring of Vehicle Service - HELD THAT:- The Appellant have provided Buses to Eastern Coal Field Ltd.(ECL) for transporting/carrying DSP Employees/Staffs from their residents at the Township Area to Plant & Back - The buses were also used for transporting children to their school and back. As per Section 65(115), Tour Operator means any person engaged in planning, scheduling, organizing or arranging tours by any mode of transport. In this case the buses provided by the Appellant carry the employees/staff from the factory to residence and back. Similarly, children were carried from residence to school and back. This does not involve any planning, scheduling, organizing or arranging tours as required under ‘Tour Operator’ service. Accordingly, the service rendered cannot be classified as ‘Tour Operator’ service. Demand under Rent-a-Cab Operator service - HELD THAT:- There is no specific demand of service tax under the category of ‘Rent-a-Cab’ service in the impugned order. As per the impugned order, the service may fall under either of the category. As there is no specific demand for Rent a Cab service in the impugned order, the demand is not sustainable. Demand raised based on the Balance Sheet figures only - HELD THAT:- The Appellant contended that the department is fully aware of the activities undertaken by them. There is no evidence brought on record to substantiate the allegation of suppression of fact. Accordingly, the penalty not imposable. Even otherwise, as the demand itself is not sustainable, the question of demanding interest and imposing penalty does not arise. Appeal allowed. Issues Involved:1. Classification of services provided under 'Cargo Handling Service' versus 'GTA service'.2. Classification of services provided under 'Tour Operator Service' versus 'Rent-a-Cab service'.3. Validity of demand based on balance sheet figures and the applicability of extended period and penalties.Summary:Issue 1: Classification under 'Cargo Handling Service' vs. 'GTA service'The Appellant provided transportation services for coal from mines to railway sidings for Eastern Coal Field (ECL). The department classified this as 'Cargo Handling Service' and demanded service tax. The Appellant contended that the primary service was transportation, already taxed under reverse charge by ECL. They cited Board Circular No. 104/07/2008-S.T. and the Tribunal's decision in M/s Maa Kalika Transport Pvt. Ltd. vs. Commissioner of CGST & CE Rourkela, arguing that the service should be classified as 'GTA service'. The Tribunal agreed, finding that the contract was primarily for transportation and that ancillary services should not be separately classified. Consequently, the demand under 'Cargo Handling Service' was held unsustainable.Issue 2: Classification under 'Tour Operator Service' vs. 'Rent-a-Cab service'The Appellant also provided buses for transporting ECL employees and children. The department's demand was vague, classifying the service as either 'Tour Operator Service' or 'Rent-a-Cab service'. The Tribunal found that the service did not involve planning or organizing tours, thus it couldn't be classified as 'Tour Operator Service'. Additionally, since there was no specific demand under 'Rent-a-Cab service', the Tribunal held the demand unsustainable, citing Shubham Electricals vs. Commissioner of Service Tax, Rohtak.Issue 3: Validity of demand based on balance sheet figuresThe demand was based solely on balance sheet figures, with no evidence of suppression of facts by the Appellant. The Tribunal found no basis for invoking the extended period or imposing penalties. Therefore, the penalties and interest were also held to be unsustainable.Conclusion:The Tribunal set aside the impugned order, allowing the appeal filed by the Appellant, and declared the demands and penalties as unsustainable. (Pronounced in the open court on 19.10.2023)