2009 (11) TMI 137 - AT - Service Tax

Tribunal upholds Service Tax on cargo handling services; no penalty for historical confusion

The Tribunal upheld the levy of Service Tax on activities like urea loading, shifting, and stacking, categorizing them as cargo handling services. The ... Cargo handling service- the assessee was engaged in activity of loading, shifting, and stacking of urea bags and other miscellaneous jobs in relation to pre-transportation activity for its client. Lower authorities confirmed service tax demand on the assessee under the ‘Cargo handling service; along with penalty. Held that- when the question of interpretation of law caused confusion to both sides, such a case could not be held to be a case of intention to evade tax liability, therefore no penalty would also be leviable in the instant case. Thus for re-determination of the tax liability for the normal period and for non-imposition of penalty for that period, the matter was to be sent back to the adjudicating authority to re-determine the service tax liability with interest, if any. Issues:Levy of Service Tax on various activities including urea loading, shifting and stacking of urea bags, and miscellaneous jobs.Analysis:The dispute revolved around the levy of Service Tax on activities such as urea loading, shifting and stacking of urea bags, and miscellaneous jobs. The Appellant contested the tax liability, arguing that the activities did not fall under the category of 'cargo handling service.' However, the Revenue relied on previous Tribunal decisions to support the imposition of Service Tax. The Tribunal, after hearing both sides extensively and analyzing the nature of the contract, upheld the tax liability, categorizing the activities as cargo handling services. The Tribunal referred to its past decisions and the order in Singh Bros. v. CCE to support its conclusion.The Tribunal noted that a show-cause notice was issued for a period when confusion existed regarding the levy of Service Tax, and there was no apparent intention by the Appellant to evade tax liability. As a result, the Tribunal decided that the Appellant should not be penalized for periods that were already time-barred. The dispute was narrowed down to the normal period of limitation, as held in similar cases by the Tribunal. The Adjudicating Authority was directed to re-determine the tax liability only for the normal period.Regarding the question of penalty, the Tribunal, following its earlier decision in Singh Bros. case, concluded that when confusion existed due to the interpretation of the law, it could not be considered as an intention to evade tax liability. Therefore, no penalty was deemed leviable, even for the normal period. The matter was remanded back to the Adjudicating Authority for re-determination of Service Tax liability with interest, if applicable, providing a reasonable opportunity of hearing to the Appellant.