TaxTMI 
TaxTMI 
2014 (12) TMI 502
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....d by the appellant merit classification under the category of 'Cargo Handling Services'. Accordingly, the Commissioner has confirmed demands of service tax of Rs. 56,36,38,084/- and Rs. 2,16,84,812/- together with interest thereon and also imposed penalties under Sections 75, 76, 77 & 78 of the Finance Act, 1994. 2. The brief facts relevant to the case are as follows. The appellant, M/s United Shippers Ltd. holds Service Tax Registration under the category of 'Cargo Handling Services' & 'Port Services (Minor)' w.e.f. 23/09/2003 and 03/09/2003 respectively. During the relevant period, the appellant had entered into contracts with various customers and agreed to provide various services in relation to stevedoring including on-board stevedoring, barging, loading, unloading, transportation of cargo by barges from Mother Vessels to Jetty, handling, weightment, deployment of security services, storage and all other services necessary for successful discharge of cargo. Acting on intelligence that the appellant was evading service tax on the services rendered by it to its various customers which appeared to be taxable under the category of 'Cargo Handling Servi....
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....pplicable Service Tax paid under "Cargo Handling Service" 01.07.2003 To 31.08.2009 Introduction for "Other Port Services (Minor Ports)" No Service Tax applicable No Service Tax applicable Service Tax paid under "Other Port Services (Minor Ports)" 01.09.2009 To 30.06.2010 Introduction of entry for "Transportation of Coastal Goods Service" Service Tax paid under "Transportation of Coastal Goods Service" (Pet Coke Exemption Claimed) Service Tax paid under "Transportation of Coastal Goods Service" (Pet Coke Exemption claimed) Service Tax paid under "Other Port Services (Minor Ports) Post 01.07.2010 Expansion of the definition of "Other Port Services (Minor Ports)" to cover any service provided within a minor port (with/without authorisation of the port) Service Tax paid under "Transportation of Coastal Goods Service" (Pet Coke Exemption claimed) Service Tax paid under "Other Port Services (Minor Ports)" Service Tax paid under "Other Port Services (Minor Ports)" The Appellant submits that the aforesaid tax position adopted is in accordance with the Service Tax provisions, for the reasons detailed herein below. 3.2 TRANSPORTATION OF GOODS FROM THE MOTHER....
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....ew was challenged before the Hon'ble Supreme Court in BSNL vs. UOI [2006 (2) STR 161 (SC)] in which the aforesaid finding of the High Court was overruled, and it was categorically held that the aspect theory would not apply to enable the value of the goods to be included in the rendition of services or vice-versa. In the present case, the freight charged for the barge transportation of the goods from the mother vessel to the jetty is includible in the assessable value on which Customs Duties are levied. Applying the rationale laid down in the aforesaid ruling of the Hon'ble Supreme Court, once the freight has already rightly suffered Customs Duties as a part of the value of the goods being imported, a dual levy of Service Tax cannot also be imposed on the self-same freight amount, and the demand on this basis cannot sustain. Further, it is submitted that this activity of transportation of goods from the mother vessel to the jetty is carried out before the goods crosses the customs frontier of India, and consequently, will be construed to be undertaken while the goods are still in the import stream and prior to the successful completion of the process of importation of the g....
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....ra and Mahindra [1995 (76) E.L.T. 481 (S.C.)] - Mirah Exports Pvt. Ltd. vs. Collector of Customs [ 1998 (98) E.L.T. (S.C.)] 3.4 WITHOUT PREJUDICE, THE DOMINANT NATURE OF THE ACTIVITY IS IN ANY EVENT TRANSPORTATION, AND NOT CARGO HANDLING It is submitted that even if the activity carried out by the Appellant is construed as a composite service comprising barging and handling, in terms of Section 65A (2) of the Act, the essential/dominant character of such composite service is evidently the barging activity without which the cargo handling activity would not be necessitated at all. Moreover, the Appellant has never carried out the activity of only cargo handling at the port, i.e. unloading of cargo at jetty, internal transport of cargo inside port etc., without carrying out the basic activity of barge transportation of the goods from the mother vessel to the jetty and vice-versa. The Appellant submits that the Respondent himself has recorded a finding to this effect, at paragraph 42 of the Order-in-Original, viz. the dominant nature of the activity carried out by the Appellant is the transportation activity. The Appellant submits, that despite arriving at the af....
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....vities themselves not having taken place within the port area, cannot be brought to tax under the entry for 'Port Services', as the said taxing entry covers only those activities carried out within the port limits. Without prejudice, it is submitted that prior to 01.07.2010, the taxing entry for 'Port Services' covered only those activities carried out within a port premises which specifically required an 'authorisation' from the Port. The term 'authorisation' is distinct from a mere licence to operate with the port area. An authorisation process requires entering into a contract with the port authority for the given activity, submission of a tariff to the port authority for the proposed activities, and ratification of the tariff by the port followed by its publication in the Official Gazette. Such authorised party is then not permitted to charge rates which are higher than the rates so published. A 'licence', on the other hand, implies that the party simply has a no-objection/permission for operating within the port area, but can enter into contract directly with private parties to carry out the activity in question, and can agree upon the r....
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.... the Appellant submits that the extended period of limitation is not invokable in the present case as the issue involved is one of bona fide interpretation. In this regard, attention is drawn to the fact that there was confusion in the Department's own m9ind as to the correct classification. This is evident from the fact that the Department vide letter dated 22/02/2008 initially sought to recover the tax under the entry for 'Port Services' but changed its stance to 'Cargo Handling Service' upon being informed by the Appellant vide letter dated 27/02/2008 that it did not process the requisite port authorisation for the barging to be classified under 'Port Services'. The Appellant also places reliance upon the decision in Uniworth Textiles Ltd. Vs. CCE Raipur [ 2013 (288) ELT 161 (SC)], wherein it was held that the extended period of limitation is not invokable for mere non-payment and requires a deliberate default on the part of the assessee. It is submitted that there has evidently been no such deliberate evasion of tax on the part of the Appellant in the present case, and the demand which is beyond the normal period of limitation therefore cannot sustai....
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....but does not include, handling of export cargo or passenger baggage or mere transportation of goods w.e.f. 16/5/2008 "Cargo handling service" means loading, unloading, packing or unpacking of cargo and includes,- (a) cargo handling services provided for freight in special containers or for non-containerised freight, services provided by a container freight terminal or any other freight terminal, for all modes of transport, and cargo 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; Section 65(105)(zr) "Taxable Service" means any service provided or to be provided to any person, by a cargo handling agency in relation to Cargo Handling Services. 4(d) Vide Circular B11/1/2002-TRU dated 01/08/2002, the Board has clarified the scope of the Cargo Handling Service in Annexure-II to this circular. Paras 3,3.1, 3.2, 3 4 & 6 which....
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....n cargo handling service and the port service. However since port services covers all the service in relation to goods and vessels and therefore more specific to port, the service provided in a port in relation to handling of goods would be appropriately covered under port service and no separate levy will be attracted under the category of cargo handling agency service. Similar would be the case in respect of service provided for storage of goods in the port premises." 4(e) According to the Department, the services provided by the appellant to its customers were a continuous chain of activities originating from the point of unloading of cargo from the Mother Vessels and culminating at the point of loading of the said cargo onto the trucks of the customers for final delivery. Therefore, the services provided by the appellant are clearly a composite service including transportation of the cargo by barges from the Mother Vessels to the Jetty. As per facts on record, the appellant had provided services to its customers in relation to various goods like coal, Sulphur, cement, etc. from the point of unloading of the cargo from the Mother Vessel right upto the point of loading onto the ....
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....; - Loading of trucks for final dispatch - Weighment of cargo (once) at Dharamtar port - Deployment of security services for your cargo - Transportation to storage areas. - Free storage period upto 30 days from the date of discharge completion. - In case of storage of the cargo at the plot exceeds 30 days then the storage rent will be applicable 2 Rs. 20/- PMT per month on the balance cargo towards supervision. - (VII) REMUNERATION: * For Scope of work, detailed under 1A : Rs. 218.49 PMT * For Scope of work, detailed under 1B : Rs. 20.94 PMT * For Scope of work, detailed under 1C : Rs. 35.00 PMT Plus service tax as applicable. Total : Rs. 278.00 PMT Basis bill of lading weight/draft ....
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....ude and has brought all like nature activities to its fold expressly and by inclusion of such like nature activities under the class 'cargo handling services'. However classification of service under this category is subject to two exceptions/exclusions: viz.,: (1) handling of export cargo or passenger baggage and (2) mere transportation of goods. These two activities are beyond the scope of such class from taxation for rationale behind them. Accordingly, cargo handling services provided in respect of domestic cargo only are liable to tax. Event of levy arises when service relating to or in relation to handling of cargo is provided by a cargo handling agency irrespective of mode of transport used for movement of such cargo. Precisely, following activities which are contemplated to be taxed as cargo handling service are: (1) By express terms: (A) Loading, unloading, packing or unpacking of cargo; (2) By inclusive terms: (B) Handling service relating to cargo: ....
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....ouble taxation under the Customs Act, 1962 and the Finance Act, 1994. 4(j) It appears that transport of cargo by barges from the Mother Vessels had taken place when the Motor Vessels were at Mumbai Floating Light/Inner Anchorage of Mumbai Port Trust, i.e. when the vessels were already in India. Therefore, there does not appear any legal bar to levy service tax on the services provided in relation to the cargo transported by the barges from the Mother Vessels to the Jetty. It would also not be correct to say that it would amount to double taxation. The levy of customs duty and service tax are under two separate enactments. Therefore, both the levies are permissible simultaneously. In the case of CST, Bangalore V/s. Lincoln Helios (India) Ltd. - 2011 (23) STR 112 (Kar), the Hon'ble High Court has held that excise duty is levied on the aspect of manufacture and service tax is levied on the aspect of services rendered. Therefore, it will not amount to payment of tax twice. 4(k) Total 5 show cause notices have been issued. The 1st Show cause notice dated 23/10/2008 covers the period from 01/07/2003 to 31/03/2008. This show cause is partly within the normal period and partly beyond....
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....s within the country. It would appear to us that the import of goods into India would commence when the same cross into the territorial waters but continues and is completed when the goods become part of the mass of goods within the country; the taxable event being reached at the time when the goods reach the customs barriers and the bill of entry for home consumption is filed." Thus when the goods are being transported by the barges from the mother vessel to the jetty onshore, that activity is part of the import transaction of bringing the goods into India from a place outside India. The question of rendering any service in respect of such goods by way of cargo handling or otherwise can take place only after the customs transaction is completed. Therefore, the question of levying to service tax the transportation by barges from the mother vessel to the jetty onshore, would not arise at all since the said activity is part of the import transaction leviable to import duty and we hold accordingly. 5.3 This is also evident from the fact that section 14 of the Customs Act, 1962 relating to determination of value of import goods for the purposes of levy of customs ....
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....value of the goods plus cost of transport for clause (iii). Provided also that in case of goods imported by sea stuffed in a container for clearance at an Inland Container Depot or Container Freight Station, the cost of freight incurred in the movement of container from the port of entry to the Inland Container Depot or Container Freight Station shall not be included in the cost of transport referred to in clause (a). Explanation.- The cost of transport of the imported goods referred to in clause (a) includes the ship demurrage charges on charted vessels, lighterage or barge charges". These amended provisions came into force with effect from 10/10/2007. The CBEC has also clarified vide circular 34/2009 dated 30/11/2009 that "the issue of includibility of barge charges in the value (of imported goods) will be governed by the provisions of section 14 of the Customs Act, 1962 read with the Customs Valuation (Determination of Price of Imported Goods) Rules, 2007 for the assessment arising in the period from October 10, 2007 onwards." Thus the question of demand of service tax on barge charges and the handling charges connected therewith wo....
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....1/1/2002-TRu dated 01/08/2002 also make this position very clear. In Annexure II to the said circular, in para 4 thereof, it has been clarified if the bills raised for the services rendered indicates the amount charged for cargo handling and transportation separately on actual basis, then the tax would be leviable only on the cargo handling charges. The contracts entered into with the customers show separately the charges towards shipping charges of cargo from Mother Vessel to Dharamtar jetty. Therefore, there is no merit in the contention that transportation charges should be included in the value of taxable services in respect of cargo handling service. 5.5 The next issue for consideration is whether coastal transportation of goods could be levied to service tax under cargo handling service prior to 06/07/2009. Transport of coastal goods and goods transported through inland water came under the purview of service tax levy vide Finance Act, 2009, with effect from 06/07/2009. Vide notification No. 30/2009-ST dated 31/08/2009 transport of coastal goods in respect of items specified in the Table annexed thereto were exempt from service tax. The appellant herein undertook coastal tra....