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2023 (7) TMI 435 - AT - Service TaxClassification of services - Transportation Service or Cargo Handling Service? - Transportation of Coal Services upto a distance of 200 km against various work orders - service rendered are essentially ‘Transportation Service’ naturally bundled or the individual services in the contract can be vivisected to demand service tax or not - scope of SCN for demand of service tax under 'Cargo Handling Service' - validity of demand only based on the data received from Income tax department, without any corroborating evidence - extended period of limitation - penalties. HELD THAT:- The Ld. Commissioner has arrived at the conclusion that the Appellant has provided multiple services in the form of loading, unloading, handling, providing trucks, obtaining delivery orders obtaining mining permission etc. and hence the services provided are not mere transportation - It is observed that the contract is a composite contract primarily for the purpose of transportation of coal beyond 180 to 200 KM. The activities like loading, unloading, obtaining delivery orders etc are incidental or ancillary to the transportation service. The contract has not provided any separate charges for these activities. The composite contract cannot be vivisected to arrive at the value of service for each activity artificially. Relying on the Board Circulars Circular No. 104/07/2008-S.T. dated 06.08.2008 and Circular No. 186/5/2015-ST dated 05.10.2015, it is held that the contracts are essentially meant for transportation of goods and other activities are naturally bundled along with this this principal service. Once the services rendered are classified as Transportation Service, the liability of payment of service tax on these services was not on the Appellant, as the service recipients in all these cases are Companies registered under Companies Act, 1956/2003, and the liability to pay service tax is on the recipients of service as provided under Rule 2(1)(d)(i)(B) of the Service Tax Rules, 1994. Scope of SCN - Classification of the service rendered by the Appellant under the category of Cargo Handling Service - HELD THAT:- The Appellant was not providing any of the services mentioned above which fall under the category of 'Cargo Handling Agent Service'. Further, it is observed that there was no proposal in the Notice to categorize the service rendered by the Appellant as 'Cargo Handling Agent service'. In the impugned order, the adjudicating authority classified the services under the category of Cargo Handling agent Service' on his own. Thus, it is observed that the adjudicating authority has travelled beyond the scope of the Notice, which is legally not sustainable. Demand has been confirmed on the basis of the data received from Income Tax department - HELD THAT:- No effort was made by the department to ascertain whether the amount received by the Appellant was on account of rendering of any taxable service on which the Appellant was liable to pay service tax. There is no finding in the impugned order to this effect - It is observed that there is no new material evidence brought on record for raising the demand of service tax on the value mentioned in the records received from the Income Tax department. The demand cannot be raised merely on the basis of the data received from the Income Tax Department, without any corroborating evidence to substantiate that the value received were in connection with taxable service rendered by the Appellant. Extended period of limitation - Penalties - HELD THAT:- The Appellant stated that there is no suppression of fact involved in this case. The department itself was not clear under what category the service rendered by the Appellant was classifiable - the adjudicating authority himself has classified the service under different categories. Thus, there was no clarity on the classification of the service even within the department - there is no suppression of fact involved in this case. Consequently, extended period cannot be invoked to demand duty. On the same reason, penalties imposed in the impugned order are also not sustainable. Appeal allowed.
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