TaxTMI 
TaxTMI 
TaxTMI 
2016 (4) TMI 156
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....rissa These packers were engaged in Palletisation or packing of goods for the purpose of ease of transport. ITW India at Orissa was engaged in palletisation and marking of refractory bricks, ITW India at Vishakhapatnam was engaged in the strapping, marking and end cutting of the metal Coils. Both the activities were done within the factory of the client. It can be seen that there are in fact two different sets of facts and issues. In case of coal handlers the dispute is regarding classification of service under the Cargo Handling Service. In case of packers the dispute is regarding the alternate classification under packaging services and Cargo Handling Service. The coal handlers and packers filed following appeals before the Hon Supreme Court of India. S. No Appellant CA No Order appealed against Forum Reference 1 ITW India Ltd 6038-6039 of 2007 CESTAT (Kolkata) 2007 (8) STR 490 2 ITW India Ltd 1470-1474 of 2011 High Court of (AP) Order dated 14.3.2011 in CEA No. 49/2009, 15/2010, 18/2010, 20/2010 and 38/2010 3 Coal Carriers 5595-5596 of 2011 HC of Orissa 2011(24) STR-395 4 Vijaylaxmi 7384-7385 of 2011 HC of Orissa 5 Gajanand Agarwal 7386-7387 of 2011....
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....ides the matter within one year. Needless of mention the larger bench of the CESTAT shall decide all the issues involved. The appeals stand disposed of." The Hon'ble Supreme Court in it's order has observed as under: "two Benches of the Customs, Excise and Service Tax Appellate Tribunal (hereinafter referred to as 'CESTAT') have taken a contrary view". Based on this observation Hon'ble Supreme Court further orders that "We accordingly, set aside both the orders and remit the cases back to the CESTAT with a request to the President, CESTAT, to constitute a larger Bench for deciding the issue involved." From the above directions it is clear that only two orders of the CESTAT which have taken contrary view have been set aside and remitted to the larger bench of CESTAT. However it is noticed that in the case of coal handlers, CESTAT order has been upheld by Hon High Court of AP. In the case of packers there are order of Tribunal and of Hon High Court of AP, taking contrary stand. The disputes involved are examined in detail in following paras. 2. In case of Coal handlers appeal was filed against following orders a) Hon'ble High Court order in case of Coal ....
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....resaid findings of the First Appellate Authority exercising appellate jurisdiction and power by recording his reasons were examined by the CESTAT in the Second Appeal. The CESTAT in its concurrent finding of fact with reference to the grounds urged and considering the relevant law placed by the parties held that the order impugned in the appeal does not call for any interference. However, penalty is set aside holding that there is no intention on the part of the appellant to suppress the payment of service tax to the Revenue. Therefore, that portion of the order is set aside. After carefully examining the correctness of the findings we are of the view that the grounds urged in respect of the first question is not tenable in law and the same is liable to be rejected. The Hon High Court had upheld the decision of the Tribunal reported in 2009 (13) STR 138 (Tri-Kolkata) . Tribunal in that case had observed as under: 15. Combined reading of provisions of section 65(105)(zr) and 65(23) of the Act throw light that cargo handling agencies are taxable entities. Cargo handling service provided by such entities attract the levy of service tax. Section 65(23) has a wide amplitude and has ....
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....er by vessel in ships or aircrafts. 17. It was noticed from the agreement of the parties that time was essence of the contract. The nature of activity that was carried by the Appellants was to load the cargo i.e. coal in the Railway wagons. Such an activity squarely falls under the definition of cargo handling service provided by Section 65 (23) read with Section 65 (105) of the Finance Act, 1944 and brings the appellants to the fold of law for such service provided. Accordingly we decline to intervene to the orders passed by the Ld. First Appellate Authority except in the matter of penalty which we consider not imposable on the facts and circumstances of the case. We intervene to the Revisional order involved in Appeal case No. 41/06 and waive entire penalty imposed finding no justification of imposition since there was no willful suppression. We noticed that the appellants had no intention to cause evasion of revenue but at the infancy stage of implementation of law there appears to have confusion as to taxability. Accordingly, we waive the penalties levied under different Section of the law on all the appellants by the impugned orders. But we make it clear that when tax was le....
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....decisions including those involved in the Modi Construction Co. and Sainik Mining & Allied Services Ltd. (supra), this Tribunal came to the conclusion that the said activity would fall within the purview of "Cargo Handling Service" and leviable to service tax accordingly. However, the Tribunal in the said case held that as there was a confusion as regards the taxability of the activity, the demand should be restricted to the normal period of limitation and extended period of time could not be invoked. The same ratio was followed by this Tribunal in the case of Gayatri Carriers Pvt. Ltd. wherein also the question for consideration was handling of coal in the mining area belonging to South Eastern Coal Ltd. prior to 01/06/2001. Following the ratio in Gangadhar Bulk Movers Pvt. Ltd. case (supra) this Tribunal again took the view that the activity of loading and unloading of coal in the mining area would come within the purview of "Cargo Handling Service". The Hon'ble High Court of Orissa in the case of Coal Carriers (supra) held that loading of coal into the railway wagons would fall within the definition of "Cargo Handling Service". The Hon'ble High Court also observed that a....
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.... services and there was no contrary view. In case of three of the appellants (handling coal in the mines), the decision has been taken by the Hon'ble High Court of Orissa and in two cases of the coal handlers, the decision has been taken by the Tribunal relying on the decision of Hon'ble High Court of Orissa. From the above orders it is clear that in case of coal handlers listed as A(i) to A(v) in first para there is no contrary view. All the orders are aligned to the views expressed by the Hon'ble High Court of Orissa order dated 25.2.2011. 3. It is noticed that incase of decisions in respect of Packers, namely ITW India Ltd two contrary orders were passed by CESTAT. In one case the Hon High Court of AP has upheld the order of CESTAT. Therefore, in case of packers, there were two orders before the Hon Supreme Court, one of Hon High Court of AP and another of Tribunal (Kolkata). i) In case of ITW INDIA LTD. The Kolkata bench of tribunal passed an order as reported in 2007 (8) STR 490 (Tri-Kolkata). In the said order the tribunal observed as under: 2. The Learned advocate appearing for the Appellants states that the Appellants are engaged in the business of material h....
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....r the subject contract does not fall under the ambit of Cargo Handling Services and as such it is not liable to pay the service tax. 5.3 The Learned Advocate states that in the case decided by the Hon'ble Rajasthan High Court, the coal was initially carried by railway wagon to the rail head and then to the site of Thermal Power Station with the help of wagon tippling system to be fed in the boiler bunkers through conveyor system. He states that since in that case, the Hon'ble High Court has held that the activity was not coming under the scope of cargo handling service, in the present case though the goods packed by the Appellants are to be moved by transport subsequently, the same should not be covered under the cargo handling service. With great respect, we note that the Hon'ble Rajasthan High Court has considered un-loading of the coal by the wagon tippling system and thereafter the coal was transported by conveyor belt and not by any other mean of transportation. Hence, the ratio of the decision based on such consideration will apply to a similar case where the goods are transported by conveyor belt etc. and not by employing any other means of transportation such a....
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..... Considering the fact that the levy on cargo handling service was a new tax, we are of the view that a lenient consideration in regard to imposition of penalty is called for. 5.7 In view of our findings as above, we hold that the activities of the Appellants is taxable as cargo handling service. However, we set aside the impugned orders and remand the matter to the original authority for the limited purpose of excluding the cargo handling service provided by the Appellant in respect of export cargo and for re-determining the tax payable thereafter. As regards the penalties imposed, we take a lenient view and set aside the same. All the three Appeals are disposed off in the above terms. The Cross Objection also stands disposed of. ii) In case of ITW INDIA Ltd. the Bangalore bench of tribunal passed an order in respect of five appeals. The said order was upheld by Hon High Court of AP. IN Tribunal three appeals were filed by ITW INDIA LTD. in respect of demand of service tax in respect of services provided. One appeal was filed by ITW INDIA LTD. against remand of refund claim and another was filed by tribunal in its order reported in = 2009 (14) S.T.R. 826 (Tri-Bang) observed as f....
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....e of S.B. Construction Company Vs. U.O.I. [2006 (4) STR 545 (Raj.)] . In fact the Tribunal notes that the goods are packed for transport but fails to examine that the next activity of transportation is also required to be done by a cargo handling agency. The Tribunal has not given any finding whether the appellants are specifically covered under the packing service which has come into effect from 16.6.2005 and how the appellants could be covered for the same activity under two different categories. It was further submitted that the same Bench of Kolkata Tribunal in the matter of M/s B.K. Thakkar Vs. CCE & Cus, Bhubaneshwar 2008-TIOL-148-CESTAT-KOL has taken a different view in respect of the activities of loading and unloading of iron ore. 8. It was also urged that with effect from 16 June 2005, the appellant is paying service tax under the packaging service. The packaging activity is generally understood as the activity of bundling, bounding, making parcels putting merchandise products into containers etc. for commercial handling. ___ 17. On a very careful consideration of the entire issue, we find that the activity rendered by the appellants more appropriately can be described....
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....in the impugned order which demands service tax on the activity of the appellant under the category of 'cargo handling service'. Therefore it is not correct also to adjust the amount, paid under the category of 'Business Auxiliary Service' for the period prior to 16th June 2005. We also find that the Commissioner has included the value of the export cargo in the demand that is also not correct. As the service tax itself is not payable under the category of 'cargo handling service', no interest can be demanded and penalty imposed is also not justifiable. In the above circumstances, we have no other option but to allow the appeals. Thus these three appeals are allowed with consequential relief. ___ Service Tax Appeal No.99/2007 & 110/2007 22. On a very careful consideration of the entire issue, we find that the party was doing 'packaging' activity. This is brought out in the Order-in-Appeal. The packaging activity came under the service tax net only with effect from 16th June 2005 . Therefore the Commissioner (Appeal) was correct in holding the view that prior to that date whatever tax was paid under any of the category is liable to be refunded. In ....