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Shreem Coal, SSV Coal Carriers, ITW India Ltd, Coal Carriers, Vijay Laxmi Pvt Ltd, Gajanand Agarwal, Commissioner of Central Excise, Hyderabad Versus Commissioner of Central Excise, ITW India Ltd

2016 (4) TMI 156 - CESTAT MUMBAI

Coal Handlers - Classification - Service under the Cargo Handling Service - Coal handlers are involved in the loading/unloading of coal in the collieries and into railway wagons in railway sidings - Held that:- all the cases involving handling of coal in the collieries have been decided in favor of revenue on common grounds by holding the services to be classifiable as cargo handling services and there was no contrary view. In case of three of the appellants (handling coal in the mines), the dec .....

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ear to have been remanded to the CESTAT. - Coal Packers - Classification - under packaging services and Cargo Handling Service - Engaged in Palletisation or packing of goods for the purpose of ease of transport - Held that:- in case of Packers the decision of CESTAT (Bangalore) has been upheld by Hon High Court of AP and therefore merged with it. It would appear that the correct facts were not presented before the Hon Supreme Court. The contrary views in the cases listed before the Hon Supr .....

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T/14 to 19/06, ST/110/07, ST/47/08, ST/62/07, ST/71/07 & ST/99/07 - Order No. M/86275/16/LB - Dated:- 2-3-2016 - G Raghuram, President, S S Garg, Member (J) And Raju, Member (T) For the Appellants : Shri V Shridharan, Shri Badrinarayan, Advs., Shri Vinay Jain, CA, Shri Kartik Kurmy, Shri SB Sharma & Shri Utkarsh Srivastav, Advs For the Respondents : Shri Roopam Kapoor, Comm & Shri DV Nagvenkar, Addl. Comm. (ARs) ORDER Per Raju This case involves following appellants A The coal handlers n .....

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s, 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 .....

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reem Coal Carriers 1687 of 2015 CESTAT (Mumbai) 2015 (37) STR 1067 7 SSV Coal Carriers 1697 of 2015 CESTAT (Mumbai) The preliminary issue raised by revenue relates to the scope of the remand. The revenue has argued and submitted in their written submissions as follows 4. The order of Hon'ble Supreme Court wherein it has been observed that needless of mention the larger bench of the CESTAT shall decide all the issue involved needs to be viewed in light of the above. "All the issues" .....

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;ble Court had remanded the matters primarily for the purpose of deciding the conflict arising out of the two orders as elaborated in "set aside both the orders". It is submitted that the other cases tagged along with the two ITW orders does not have any correlation with the factual issues involved in the case of Coal Carriers, Gajanand Agarwal, Shreem Coal, SSV Coal Carriers." It was argued by the revenue that the remand is only in two a case where there is contradiction between .....

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unsel for both the parties agree that the matters be remanded back to the CESTAT so that it is decided by a larger bench to resolve the conflict. 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. Since the matters have now become old, we would appreciate if the larger bench decides the matter within one year. Needless of mention the larger bench of the CESTAT shal .....

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titute 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 .....

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in first as A(i) A(ii) and A(iii) the order was passed by Hon'ble High Court of Orissa. Hon'ble High Court order dated 25/02/2011 as reported in 2011(24) STR 395 observed as follows 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 .....

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Services with effect from 16-8-2002. Therefore, it is held that every such service provider is to get itself registered provided in the Service Tax Laws. Therefore, it is further held that the appellant received the amount for the cargo handling service rendered by them to M/s. MCL to the proper officer of Central Excise by not obtaining the registration, not paying service tax and not submitting any return with the intent to evade payment of service tax. The appellant failed to disclose wholly .....

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ion 75A of the Act. 24. The aforesaid 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 ap .....

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ion 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 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 .....

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ontemplated 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: (i) Provided for freight in special containers or for non-containerised freight; (ii) Provided by a container freight terminal or, by any other freight terminal; and (3) Cargo handling service provided which is incidental to freight. 16. What that appears to be necessity of law for taxation under the cl .....

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cking of cargo and handling of cargo for freight in special containers or non-containerized freight and service provided by container freight terminal or other freight terminal for all modes of transport are subject matter of taxation under the class "cargo handling service". That apart, any activity incidental to freight of cargo is also liable to be taxed under such class. Mode of transport is irrelevant for incidence of levy once the service provided meets the test of handling of ca .....

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ance 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 appellan .....

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n case of Shreem Coal carriers 2015 (37) S.T.R. 1067 In case of parties listed in first para as A(iv) and A(v) the order was passed by Tribunal relying upon the decision of Hon'ble High Court of Orissa dated 25/02/2011 as reported in 2011 (24) STR-395. The tribunal in its order (reported as 2015 (37) STR 1067 (Tri-Mumbai)) has observed as under "5. We have carefully considered the submissions made by both the sides. 5.1 Section 65 (23) of the Finance Act, 1994 defines the "Cargo Ha .....

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5.2 From the above definition, it can be seen that loading, unloading, packing or unpacking of cargo falls within the "Cargo Handling Service". The next question is whether the coal at pit-head is a cargo or not. The statute does not define what cargo is; therefore, the dictionary meaning of the term has to be taken for deciding what cargo is. According to the Blacksmith dictionary, the term cargo means, the load (that is freight) of a vessel, train, truck, aeroplane or other carrier. .....

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k Movers Pvt. Ltd. case (supra) wherein also the issue related to classification of service in respect of loading of coal on tippers by hiring pay-loaders and transporting from one place to another within the mining area. After considering the various 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" an .....

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. 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 as per the dict .....

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ds the invocation of extended period for confirmation of demand, we notice that there was a lot of confusion regarding the scope of "Cargo Handling Service" and there were conflicting decisions by the Tribunal and others in this regard. Therefore, the appellant could have entertained a bonafide belief that the activity undertaken by him would not come within the purview of service tax liability. Therefore, the invocation of extended period of time and imposition of penalties on the app .....

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ervice". Since there was a confusion about the scope of levy, the extended period of time is not invokable in the present case and accordingly, the demand should be restricted to the normal period of limitation. The appellant would be liable to pay interest on the service tax demand payable for the normal period of limitation. Since the dispute relates to the classification of service, imposition of penalties are not warranted. Therefore, the matter is remanded to the adjudicating authority .....

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e 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 25.2.201 .....

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observed as under: 2. The Learned advocate appearing for the Appellants states that the Appellants are engaged in the business of material handling equipment and parts thereof and they also carry out activities like unitisation, strapping, packeting or packing, the customers' goods at their premises or sites. For the activities carried on by the Appellants in the premises of M/s. Tata Refractories Ltd., Belpahar they have been asked to take Service Tax Registration and under the impugned ord .....

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or for non-containerised freight, iii) Services provided by a container freight terminal or any other freight terminal and iv) Cargo handling service incidental to freight. 5.1 The definition applies to all modes of transport. The only exemption provided in the definition is handling of export cargo, passenger baggage and mere transportation of goods. 5.2 In the cited decision in M/s. S.B. Construction Co. (cited supra), the Hon'ble High Court of Rajasthan has held as follows:- S.B. Construc .....

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ervice Tax has been levied under the 'Cargo Handling', on such services which undertakes the activities of packing, unpacking, loading, unloading of goods to be transported by any means of transportation namely truck, rail, ship or aircraft. In the instant case, the service provided by the petitioner Firm under the contract is distinct i.e. transporting coal from wagons to Thermal Power Station by conveyor belt and not by any means of transportation. Thus, we are of the view that the ser .....

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at 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 .....

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r Stations was by means other than employing one of the usual means of transportation such as ship, rail, aircraft or truck. Hence, we are unable to accept the prayer by the Learned Advocate that the ratio of the cited decision should be applied to the case of the Appellants where the goods have been packed for subsequent transportation by truck/rail. The Learned Advocate fairly admits that the decision of the Hon'ble High Court of Rajasthan is silent in regard to the initial movement of the .....

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of packing. We are of the view that the expression 'packing of cargo' is wide enough to cover the activities undertaken by the Appellants such as unitising, strapping, packeting or packing the impugned goods into cargo for subsequent movement by trucks and/or rail. We also take note of the Learned Advocate's fair submission that nothing more is required to be done to the cargo before the same is transported and hence we have no hesitation in holding that the Appellants are engaged in .....

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since the issue involved relates to classification of the impugned service, imposition of penalty on the Appellants is not justified. 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 .....

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held 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 follows: 3. The Revenue proceeded against the appellants by issue of show cause notices. According to the Revenue, the activities undertaken by the appellants, M/s. ITW In .....

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'packaging service'. Therefore the main issue to be decided in all these appeals is the category of taxable service for which the activities of the appellants would pertain. We have already enumerated the activities as given in the show cause notices, above. That point is not in dispute. According to the appellants, the activity undertaken by them would not amount to 'cargo handling services'. They are simply 'packaging services' which were taxable only with effect from 1 .....

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same. 7. The learned Counsel submitted that Kolkata Bench's decision, even though it is in the party's own case, is distinguishable in view of the certain factors. The Tribunal, according to him, has not examined whether the appellants can in the first place be at all considered as a cargo handling agency. The Tribunal has not considered the fact that only after the goods are packed, they become cargo and after they become cargo, the appellants do not handle the same which is what is re .....

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t 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 .....

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ed in the show cause notices. The appellant is actually doing the strapping of various steel items in the production line in the Steel Companies. It is also seen that they are a part of the manufacturing process and the value of the packaging is included in the assessable value of the goods and Excise duty is paid on the entire value taking into account the charges incurred by the manufactures for the package. Therefore once the Excise duty is paid on the charges, again the service tax cannot be .....

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cargo handling in the absence of transportation. Even the later amendment has linked 'cargo handling' as service of 'packaging' together with transportation of cargo. From this it is very clear that transportation is also a must in the case of 'cargo handling'. The learned Advocate has rightly distinguished the decision of the Kolkata Bench where several aspects have not been considered by the Tribunal. Once it is held that the activity of the appellant amounts to 'p .....

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on of facts. The different Adjudicating officers took different view and there was existence of several view points. In these circumstances, as the matter is one of interpretation, it cannot be alleged that the appellant suppressed any facts. Therefore the longer period also cannot be invoked. Hence, we do not find any merit 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 .....

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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 i .....

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ffect from 16th June 2005, they are liable to pay service tax under the category of 'packaging service'. In view of this position, we allow the party's appeal and reject the Revenue's appeal. Thus in the case involving ITW India Ltd., there are two contrary decisions, one of Kolkata bench of Tribunal and another by Hon High Court of AP (upholding decision of the Bangalore bench of Tribunal). The decision of Bangalore bench of Tribunal was passed by distinguishing the decision of .....

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