TMI Blog2014 (9) TMI 596X X X X Extracts X X X X X X X X Extracts X X X X ..... erms and conditions are activities incidental to cargo handling in respect of export cargo and hence not liable to service tax. From the scope of the levy, as clarified by the Board, which is the apex agency of the Government implementing service tax levy, it is clear that such service rendered by a Container Freight Station is also covered within the scope of the levy. - from the contract, entered into by the appellant, it is seen that the appellant has been undertaking all these activities and therefore squarely come within the definition of storage and warehousing services. Though the clarification issued by the Board is not binding on this Tribunal, it has a persuasive value and should be given due weight. - contention of the appellant rejected - Decided against the assessee. Storage facility in port is a requirement of law as per section 42 of the Major Port Trusts Act, 1963 and therefore, it forms an integral part of the “port services”, This is not the position obtaining in the case before us. The appellant has not produced any evidence before us that storage and warehousing is a statutory requirement under any law governing container freight stations. The very fact t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e confirmation of demand. The appellant M/s Maersk India Pvt. Ltd. (MIPL in short) is aggrieved of the classification and consequent confirmation of demand while the Revenue is aggrieved of the dropping of the demand for the period 16-8-2002 to 31-1-2005. Hence the appeals before us. 2. The facts relevant to the case are briefly as follows. M/s MIPL is running a container freight station (CFS) at Dronagiri Warehousing Complex, Uran, Navi Mumbai. They entered into a contract with M/s Maersk Logistics Pvt. Ltd. (MLOG in short) for the period 2002 to 2004 for providing various services at the CFS. As per the said contract, MIPL provided to MLOG space measuring 2100 sq.mtr. in warehouse Nos.4 and 2 for keeping, storing, stuffing and consolidation of export cargo and collected monthly rental of ₹ 10 lakhs for warehouse No. 4 and ₹ 4.35 lakhs for warehouse No. 2. For the period with effect from 1-2-2005, the space provided to MLOG was 3000 sq. mtrs. for the same purpose; however, no separate fixed monthly charges were specified in the contract. However, the rates for cargo handling were substantially increased. The department was of the view that the provision of space in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e essential or dominant nature of the service rendered is cargo handling and not storage or warehousing. 3.3 The CBEC vide circular 334/4/2006-TRU dated 28-2-2006 has clarified that - a composite service, even if it consists of more than one service, should be treated as a single service based on the main or principal service and accordingly classified. The services provided by CFS are essentially in the nature of cargo handling and the storage and warehousing services in respect of export cargo are only incidental to the main activity of cargo handling and therefore, the entire service should be deemed as cargo handling service . The Board vide circular dated 1-8-2002, at the time of inception of levy on storage and warehousing services, had clarified that such services provided by railway and bus stations would not come within the tax net as they are in the nature of passenger terminal services incidental to rail and road transport. 3.4 Reliance is placed on the decision of the hon'ble High Court of Punjab and Haryana in the case of Dr. Lal Path Lab (P) Limited [(2007) 11 STR 307 (P H)] wherein, in the context of technical testing and analysis service it was hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e light of the above, it is pleaded that the appeal of MIPL be allowed. 4. The ld. Addl. Commissioner (AR) appearing for the Revenue strongly opposed the contentions of the appellant and made the following submissions. 4.1 From the appendix II of the contract between MIPL and MLOG, it is evident that the former had provided 2100 sq. mtr. of space in warehouse Nos. 4 2 to the latter and the latter had paid a fixed monthly rental of ₹ 10 lakhs and ₹ 4.35 lakhs to the former for this service in addition to the charges paid for cargo handling. Further, MIPL's obligation also included giving empty space on rental basis, storage, stuffing and handling of export cargo, security, loading and unloading etc. These services provided comes within the scope of storage and warehousing services, as clarified by the Board in circular No. B/11/1/2002-TRU dated 1-8-2002 and as defined in section 65 (102) of Finance Act, 1994. 4.2 The appellant assessee had suppressed the facts about the contract regarding the services provided by MIPL with MLOG and 10 other customer under the category of storage and warehousing services with intent to evade payment of service tax. As regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . These substantial increases were made only to off-set the monthly rental charges which was being collected earlier. Thus the manipulation made in the contract is clearly evident which evidence the mens rea on the part of the appellant to evade service tax, necessitating invocation of the extended period of time for confirmation of demand and imposition of penalties. Similar increases in the cargo handling tariffs were made in respect of other parties also who were provided with the storage and warehousing services. In this factual scenario, the ld. AR submits that the dropping of the demand for the period prior to 1-2-2005 was an error committed by the adjudicating authority and hence, the entire demand should have been confirmed and equivalent penalties imposed on the appellant. 5. We have carefully considered the rival submissions. 5.1 From the copies of the contracts provided by the Revenue, it is evident that the appellant were rendering two types of services. In respect of all the customers, they were rendering cargo handling services such as loading, unloading, arranging for and supervision of examination of cargo, stuffing and de-stuffing of cargo, carting and bac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... category incidental to cargo handling'. It is a settled position in law that the substance of an agreement has to be considered and not the wording used in the agreement as held by the hon'ble apex court in the case of Bhopal Sugar [(1977) 3 SCC 147]. Therefore, we reject the contention of the appellant that the storage and warehousing services rendered by the appellant to specific customers on specific terms and conditions are activities incidental to cargo handling in respect of export cargo and hence not liable to service tax. 5.4 Section 65 (23) of Finance Act, 1994 defines cargo handling service' as - 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 ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le apex court. In K.P. Varghese vs. Income Tax Officer [1981] 131 ITR 597 (SC), the supreme Court, based on the earlier judgment in the case of Baleshwar Bagarti vs. Bhagirathi Das [1908] ILR 35 Cal 701/703 expounding the principle of administrative construction, i.e. contemporaneous construction placed by administrative or executive officers charged with executing a statute, held that - It is a well-settled principle of interpretation that courts in construing a statute will give much weight to the interpretation put upon, it, at the time of its enactment and since, by those whose duty it has been to construe, execute and apply it. Again in the case of Collector of Central Excise, Guntur vs. Andhra Sugar Ltd. 1988 (38) ELT 564 (SC)], the hon'ble apex Court reiterated the same as follows:- It is well settled that the meaning ascribed by the authority issuing the Notification, is a good guide of a contemporaneous exposition of the position of law. Reference may be made to the observations of this Court in K.P. Varghese vs. The Income Tax Officer, Ernakulam [ 1982] 1 SCR 629. It is well settled principle of interpretation that courts in construing a S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... do not understand how the said decision would apply in the facts of the case before us. In the Gujarat Chem. Port Terminal case, the question for consideration was whether storage services undertaken in a port area is taxable separately as storage and warehousing services or as port services . This Tribunal noted that storage facility in port is a requirement of law as per section 42 of the Major Port Trusts Act, 1963 and therefore, it forms an integral part of the port services , This is not the position obtaining in the case before us. The appellant has not produced any evidence before us that storage and warehousing is a statutory requirement under any law governing container freight stations. The very fact that the appellant is providing the said service only to selected customers on collection of separate charges itself would show that this is not a statutory requirement. In these circumstances, no reliance can be placed on the said decision for the consideration of the present appeal. In the Al Noori Tobacco Productions case [2004 (170) ELT 135 (SC)], the hon'ble apex court, quoting Lord Denning in the matter of applying precedents, held that - Each case depe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Revenue's contention is that the appellant did not enclose the contract entered into with MLOG with their letter dated 13-3-2003 and therefore, the department was unaware of the true nature of the services rendered and therefore, extended period is invocable. From the evidence on record, it is clear that in the letter dated 13-3-2003, the appellant did inform that they are collecting space reservation charges by way of fixed monthly charges from certain customers and they are not paying service tax as the said activity is part of cargo handling in respect of export cargo. The department could have very well asked for the copies of the contracts entered into by the appellant in respect of such customers. However, the department failed to take necessary action in this regard. Therefore, for the laxity on the part of the department, suppression cannot be alleged on the part of the appellant and therefore, we do not find any infirmity in the order of the adjudicating authority in dropping the demand of service tax for the period prior to 1-2-2005. However, the question is whether suppression can be alleged for the period w.e.f. 1-2-2005. The conduct of the appellant really matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or from the same act of the person concerned. But we are of opinion that the incidents of imposition of penalty are distinct and separate and even if the offences are committed in the course of same transaction or arises out of the same act, the penalty is imposable for ingredients of both the offences. There can be a situation where even without suppressing value of taxable service, the person liable to pay service tax fails to pay. Therefore, penalty can certainly be imposed on erring persons under both the above sections, especially since the ingredients of the two offences are distinct and separate. In Chairman, SEBI Vs Shriram Mutual Fund and another - 2006-TIOL-72-SC-SEBI, the hon'ble Apex Court held that mens rea is not an essential element for imposing penalty for breach of civil obligations. A penalty imposed for a tax delinquency is a civil obligation, remedial and coercive in its nature, and is far different from the penalty for a crime or a fine or forfeiture provided as punishment for the violation of criminal or penal laws. In M/s Gujarat Travancore Agency, Cochin vs. C.I.T., 1989 (3) SCC 52, the hon'ble Apex Court held that - The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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