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2018 (2) TMI 939

Classification of services - cargo handling services or transportation services? - appellants have argued that loading and unloading done is a kind of self-service necessary to undertake the service of transportation undertaken by them. - Held that: - Loading in the riverbed is not a simple activity of loading as the sand has to be mined using an excavator or other machine. The location of riverbed is not fixed. The loading in the stockyard is, however, simple activity of loading. - The contract describes it to be a contract for excavation from riverbed, transportation from riverbed to warehouse and transportation from warehouse to bunker. Rates have been quoted for both on per MT basis but the rate changes with the distance between the origin and destination. In these circumstances it is to be examined if the activity is primarily an activity of transportation or of cargo handling. - There is no doubt that the activity of removing/excavating sand from the riverbed amounts to mining activity. However for the period in dispute mining was not a taxable service. In any case, the activity of movement of sand from warehouse to bunker cannot be considered as mining activity. .....

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et aside the said demand. The revenue has filed an appeal before Hon ble Supreme Court and thematter is now pending before Hon ble Supreme Court. Revenue has alleged the aforesaid service rendered by the Appellants to WCL is classifiable under the category of Cargo Handling Services as it involves loading and unloading activity in it. Though the show cause notice alleges that the Appellants are liable to pay service tax only on the loading and unloading activity, in absence of any data or bifurcation, the department has made the service tax demand on the entire consideration received by the Appellants from WCL under the head Cargo Handling Agency Services. 2.1 Ld. Counsel argued that the agreements between the parties are essentially in the nature of Transportation of the goods. Loading and unloading of the goods are services incidental to principal activity of transportation and the entire activity is a composite service of transportation. All the work orders are essentially a transportation contract. Loading/unloading does not give an essential character to the said activity. Ld. Counsel relied on the Circular No.104/7/2008-ST dated 06.08.2008 to assert that where intermediate an .....

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7-TIOL-249-SC-ST, categorically held it to be transportation of goods services and therefore, not liable to be taxed under Mining Services. The relevant extract of the order is reproduced as under: 6. Be that as it may, even if the relied upon judgment in the case of Arjuna Carriers (supra) is of no consequence to the present case, we are of the view that the activity undertaken by the respondent i.e. transportation of coal from the pit-heads to the railway sidings within the mining areas is more appropriately classifiable under Section 65(105)(zzp) of the Act, namely, under the head transport of goods by road service and does not involve any service in relation to mining of mineral, oil or gasas provided by Section 65(105)(zzzy) of the Act. 2.4. He argued that the services of loading and unloading of the goods are services provided to self in order to accomplish the entire activity of transportation and amounts to self service. The appellants contracts are primarily undertaking the activity of transportation of coal. The activity of loading or unloading is undertaken by them to be able to provide the principal service of transportation. Thus, even if such activity is classifiable .....

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on of Black's Law Dictionary defines the term cargo as: Goods transported by a vessel, airplane or vehicle; Freight The Shorter Oxford English Dictionary defines cargo as: Freight or loading of a ship, shipload. In Chambers English Dictionary, it is defined as: The goods carried by a ship or aeroplane, any load to be carried In Cambridge English Dictionary Online Edition, it is defined as: The goods carried by a ship, aircraft, or other large vehicle. Collins Cobuild English Dictionary 3rd Edition, 2001 defines cargo as the cargo of a ship or plane is the goods that it is carrying; Macmillian Dictionary Online Edition has the following definition of cargo: Things that are being sent by ship, plane, train, or truck. Emphasis Supplied. 2.6. He argued that on the plain reading of the aforesaid definitions it can be seen that:- (i) The commercial understanding of the term cargo is the same as freight. (ii) Transportation is the essential criteria in order to term any goods as cargo. (iii) Only goods aboard a vessel, airplane of vehicle would be termed as cargo. 2.7. He argued that cargo can only refer to the goods in transit. Once they are in transit they are cargo. However, once t .....

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CCE-2008 (9) STR 531 related to transportation of coal within a colliery area where a demand under Cargo Handling Service was made against the contractors. The Hon ble Tribunal in this case held that the dominant activities undertaken being primarily within a mine, the said activity is not taxable as Cargo Handling Service. He also relied on the case of Modi Construction Co. Vs CCE 2008 (12) STR 34. In this case the assessee was undertaking the activity of shifting of raw materials within the factory area and upto the crusher plant. Following the decision of Sainik Mining (supra), the Hon ble Tribunal held that such activity of transportation within a factory cannot be taxed under the category of Cargo Handling Service. This decision of Modi Construction (supra) was affirmed by the Jharkhand High Court at 2011 (23) STR 6. In this regard, in para 4 of the said decision of the Hon ble High Court, it was held that the activity of shifting the goods both finished and unfinished goods within the factory premises could not come within the definition of Cargo Handling Service. The said paragraph is extracted below:- 4. In that view of the matter, since the activity of shifting the goods f .....

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ing up the excavated mine area with sand/debris to ensure safety of the rest of the mine. The excavation of coal from the coal mine create structural in places within the mine which have not corrected and provided for can have fatal consequences for the people working within the mine. Therefore, the sand is excavated from riverbed with the help of excavators and transferred and unloaded at such places where the coal mining is done.WCL has paid mining royalty to the government for mining of the sand. He pointed out that the definition of minor mineralsunder the Mines and Minerals (Development and Regulation)Act, 1957 covers stones, gravel, ordinary clay, sand as mineral. The said definition is extracted below: 3 (e)"minor minerals" means building stones, gravel, ordinary clay, ordinary sand other than sand used for prescribed purposes, and any other mineral which the Central Government may, by notification in the Official Gazette, declare to be a minor mineral; Thus, he argued that any extraction/excavation of sand will also be covered by scope of mining service w.e.f. 1.6.2007. Hence, no demand can be raised on the entire consideration received from WCL on such mining act .....

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o activity of transportation undertaken by the assesse. Whereas, what is involved in the present case is not a mere loading activity but also transportation of the sand from riverbed to bunkers. Therefore, the court in the said decision had no occasion to consider whether the composite contract as involved in the present case can be said to be covered under the category of Cargo Handling Service. Therefore, the present matter is factually distinguishable from the Coal Carriers case.Further other cases also relied upon by the department such as Gangadhar Bulk Movers Pvt. Ltd. vs. CCE, 2012 (27) STR (258) (T)and Shreem Coal Carriers (P) Ltd. v. Commissioner, 2015 (37) S.T.R. 1067 (Tri.-Mumbai), are also not relevant to the factum of the present case as the demand in the said case laws was also only on the loading portion as separate heads were given for the loading and the transportation activity. However in the present case composite trade has been given and thus, the said case laws relied upon by the department are factually distinguishable. Ld. Counsel for the Khandelwal Earthmovers relied on the same arguments as above. 3. Ld. AR argued that as per the contract the appellants are .....

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STAT for decision as per direction of Hon ble SC. 3.4. Ld. AR further argued that the Hon ble SC in case of Signode India Ltd. 2017-TIOL-126-SC-ST/8.3.17, dealing with taxability of packaging activity, it held in Par.9, that cargo is understood to denote goods which are ready for transportation. Ld AR further argued that the contention of the appellant that main activity is transportation and WCL is paying S.Tax under GTA is not relevant for the purpose of deciding classification of service in the instant case. In the case of Western Coalfield Ltd,2017-TIOL-1917-CEST-Del/30.3.17, Tribunal Delhi Bench has decided that WCL is not liable to pay service tax (01.01.05 to 31.01.07)as recipient of transporters service as no consignment note issued by Transporter. In this case Tribunal followed its earlier decision in case of South Eastern Coalfields , 2017-47-STR-93-T-Del/28.7.16. Hence as the said activity cannot be classified as GTA, it has to be classified as CHS. 3.5. Ld AR argued that the contention of the appellant that the major part of service activity pertains to transportation is not supported by evidence, as rate of loading , unloading and transportation of sand not shown separ .....

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ndling Service, Hon ble High Court came to conclusion that this activity amounts to Cargo Handling Service. It is apparent that the activity undertaken in the case of Coal Carriers is not merely loading of the coal into the wagons but the purpose was loading of wagons. In para 6 - 9 of the order the activities are described by the appellants in that case. 6. The case of the appellant pleaded before the First Appellate Authority, in brief, is that it is a partnership concern engaged in letting out Pay Loaders on hire basis for mechanical transfer of coal into Railway Wagons at different Railway sidings of MCL. Other contractors of MCL transport coal from different parts of the mines and dump at the Railway sidings. The Pay Loaders hired out by the appellant are used for loading of coal from Railway sidings dumps into the Railway Wagons. After loading, the Railway Wagons are dispatched by MCL to their respective customers. The Pay Loaders are owned by the appellant and are supplied to MCL along with operators. The appellant itself undertakes operation, maintenance and upkeep of the Pay Loaders. The control and possession of the Pay Loaders always remains with the appellant throughout .....

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iew on utilisation of coal mine overburden dump waste as underground mine filling material: A sustainable approach of mining (PDF Download Available). Available from: https://www.researchgate.net/publication/279189400_A_review_on_utilisation_of_coal_mine_overburden_dump_waste_as_underground_mine_filling_material_A_sustainable_approach_of_mining , it is seen that Backfilling, which is commonly known as stowing, provides stability of ground by preventing land subsidence, reducing mine fire and improving the coal production by increasing extraction of coal pillars. Different materials have been used for Backfilling, which is commonly known as stowing, provides stability of ground by preventing land subsidence, reducing mine fire backfilling in underground mine voids such as river sand, fly ash, mine tailing and waste foundry sand (WFS). Thus the purpose of the entire activity is to fill the voids created by the coal mining activity by using sand mined from the riverbed. This activity is done by the appellants is to assist in movement of sand for this purpose from river bed to stockyard/bunker in the premises or from stockyard to bunker. Loading and unloading done during this process o .....

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No:10 and Bunker No:12 to Bunker No:10 & Bunker No:12 respectively at Nandgaon Incline. (a) Stockyard of Bunker No:10 to Bunker No:10, Lead : 0-1 Km. 45,000 Cumt. Rs.20.50 per Cumt. Rs.9,22,500/- Daily quantity of sand to be transported : 375 Cumt. (b) Stockyard of Bunker No.12 to Bunker No.12 Lead : 0-1 Km. 45,000 Cumt. Rs.20.50 per Cumt. Rs.9,22,500/- Total: 90,000 For Job No.2 Rs.18,45,000/- It can be seen that the contract describes it to be a contract for excavation from riverbed, transportation from riverbed to warehouse and transportation from warehouse to bunker. Rates have been quoted for both on per MT basis but the rate changes with the distance between the origin and destination. In these circumstances we have to examine if the activity is primarily an activity of transportation or of cargo handling. There is no doubt that the activity of removing/excavating sand from the riverbed amounts to mining activity. However for the period in dispute mining was not a taxable service. In any case, the activity of movement of sand from warehouse to bunker cannot be considered as mining activity. From the terms of the contract it is apparent that the prime purpose of the contra .....

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