TaxTMI 
TaxTMI 
2011 (2) TMI 1140
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion 65(23) read with Section 65(105)(zr); (2) Whether in terms of Section 65A(2)(a) the activities of the Appellant is more appropriately not covered under "Supply of Tangible Goods Services" u/s 65(105) (zzzzj); (3) ...............................................................................; (4) Whether in view of Notification No. 30/2005-S.T., dated 10-8-2005 issued u/s 83A of the Act and Circular No. 80/1/2005-S.T., dated 10-8-2005 the adjudication order dated 31-8-2005 confirming service tax demand of Rs. 17,50,030/- for the period 16-8-2002 to 30-6-2004 is not without jurisdiction; (5) ...............................................................................; (6) Whether in absence of positive act or deliberate defiance of law the extended period of limitation can be invoked under proviso to Sec. 73(1) for mere inactions, failure or negligence by the assessee;" 3. In both the appeals, the appellant has challenged the legality of Order No. A-1087-1093/KOL/2008, dated 26-6-2008 [2009 (13) S.T.R. 138 (Tri. - Cal.)] passed by the learned Cust....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uthority, in brief, is that it is a partnership concern engaged in letting out Pay Loaders on hire basis for mechanical transfer of coal into Railway Wagons at different Railway sidings of MCL. Other contractors of MCL transport coal from different parts of the mines and dump at the Railway sidings. The Pay Loaders hired out by the appellant are used for loading of coal from Railway sidings dumps into the Railway Wagons. After loading, the Railway Wagons are dispatched by MCL to their respective customers. The Pay Loaders are owned by the appellant and are supplied to MCL along with operators. The appellant itself undertakes operation, maintenance and upkeep of the Pay Loaders. The control and possession of the Pay Loaders always remains with the appellant throughout the execution of the contract. 7. It is stated that the appellant was awarded contract vide Work Order No. MCL/CG/L/LKPA/SO(M)/Pay Loaders/2-3/17, dated 14/17-12-2002 by MCL for "Hiring of Pay Loader for Mechanical transfer of Coal Wagon at MGR Siding No. 5 Lakhanpur Area" for transfer of 56 lacs tonnes of coal over a period of two years for a contract value of Rs. 142.24 lacs payable @ Rs. 2.54 per tonne of coal....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng the appellant to produce copies of bills raised, copies of TR-6 challans and to make deposition. 11. It is stated that the appellant being aggrieved by the said letters/sommons filed a writ petition in W.P. (C) No. 9418 of 2004 under Articles 226 and 227 of the Constitution before this Court challenging the legality of the said letters/summons. This Court vide order dated 11-10-2004 quashed the notice dated 23-7-2004 and directed the appellant to cause appearance before the Sr. Intelligence Officer as per sumnnons dated 2-8-2004/9-8-2004 and make deposition/file show cause as to why the work undertaken by them does not amount to Cargo Handling Services and why the appellant is not liable to pay Service Tax on the said work. Accordingly, the appellant appeared before the Sr. Intelligence-Officer, DGCEI on 23-11-2004 and made deposition, furnished details of amounts received from MCL. In its statement dated 23-11-2004 the appellant stated that they supply Pay Loaders to MCL on hire basis, which is used for loading of coal into Railway Wagon from Railway Siding. It was further stated that the operation, maintenance and upkeep of the Pay Loaders are done by the appellant. The ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... within the purview of Section 65(23) of the Act. It is further stated that the appellant is not acting as a Cargo Handling Agent within the definition of Section 65(105)(zr) as its obligation under the contract is limited to supply of Pay Loaders for loading of coal into Railway wagons. It is further stated that they do not undertake any other activities like receiving, unloading, packing, unpacking, loading and releasing the cargo where the cargo remains in the control and possession of cargo handling agents like container, freight terminals, etc. Under the contract the coal remains under the control, possession and security of MCL, the time and manner of loading are decided by MCL. The MCL instructs the Pay Loader operator what to load and where to load. The appellant only provides the Pay Loader at the time and place instructed by MCL against hire charges measured in terms of coal loaded into the Railway Wagons. The appellant has also stated that since Section 65(23) read with Section 65(105)(zr) of the Act is not attracted, there is no liability to pay the service tax for the period in question it requested to drop the proceeding. 14. Without considering the aforesaid re....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... which is not taxable under the Act. Further, in trade parlance the term "Cargo" has a definite connotation and mere handling of goods cannot be termed as cargo handling activity but material handling activity. As per various dictionaries, "Cargo" means as follows : i. Freight or loading of a ship, shipload - Shorter Oxford English Dictionary. ii. The load or freight of a ship, air plane or vehicle, load - New Webster's Dictionary. iii. Cargo or a ship or plane, the goods that it is carrying - Collins English Dictionary. iv. Goods carried by a ship or aeroplane, any load to be carried - Chambers English Dictionary. v. The goods transported by a vessel, air plane or vehicle; freight - Black's Law Dictionary. vi. Ships" Load - Webster's New Dictionary & Thesaurus. vii. Cargo is the goods or merchandise conveyed in a ship, aeroplane or vehicle - Mitra's Legal & Commercial Dictionary Edition. 18. As per the aforesaid dictionary meanings, goods become "Cargo" only after loading into the Rail....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nloading, packing or unpacking of cargo and includes - (a) cargo handling services provided for freight in special containers or for non-containerized freight, services provided by a container freight terminal or any other freight terminal, for all modes of transport, and cargo handling services incidental to freight : and handling service incidental to freight: and (b) service of packing together with transportation of cargo or goods, with or without one or more of other services like loading, unloading, unpacking, but does not include, handling of export cargo or passenger baggage or mere transportation of goods;"                          (emphasis added) 20. The new definition is very clear which came into force with effect from 15-5-2008. Therefore, the earlier definition of Cargo Handling Services as defined has no application to the instant case. 21. This legal contention has been repudiated by the learned counsel appearing for the Central Excise Department placing strong reliance upon the finding of fact recorded by the Assessing Officer, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d conditions of work Order No. MCL/IBV/CGM/LOCP/03-04/91, dated 29-4-2003 are extracted hereunder : "1. The notice has to be in readiness for starting loading work as specified in the tender as soon as the wagons are supplied. It will not be the management's responsibility to inform the contractor after wagons are placed. They will have to make their own arrangement for keeping in information etc. 2. The rate offered and as agreed by the noticee in writing and accepted is inclusive of all expenditure relating to labour wages, transferring machine, fuel charges, wears & tears, supervision, profit and all incidental thereon including taxes and other contingencies complete for which no additional payment shall be made. But the rate is subject to variation in accordance with the rise and fall of price of diesel oil as per escalation clauses keeping the base price of diesel as on the date of receipt of the tender i.e. Rs. 20.38/litre as per provision in the tender document. The amount of security deposit will also be increased in case the price of diesel oil is further escalated by the Union Government within the contract period. 3. The departmental official will make ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ndicated in (i) and (ii) above. (iv) If the contractor fails to observe one or all clauses above and does any under loading/over loading will be fully on the account of the contractor." 23. On the basis of the said terms and conditions of the contract between the parties it has come to the conclusion by the Assessing Officer and held that activity undertaken by the appellant squarely falls within the "cargo handling service" and service tax is payable on the gross amount received by the noticee. Further, it is held that it has violated the provisions of Sections 68, 69 and 70 of the Finance Act, 1994 as amended. Further, the Finance Act, 2002 brought Cargo Handling Services under the Service Tax net with effect from 16-8-2002 vide Notification No. 8/2002-S.T., dated 1-8-2002. The services shall be taxed if provided by a Cargo Handling Agency. Section 65(105) read with Section 65(23) of the Finance Act, 1994 as amended provides for the levy of Service Tax on Cargo Handling Services with effect from 16-8-2002. Therefore, it is held that every such service provider is to get itself registered and follow the procedure including payment of service tax provided i....