TMI Blog2019 (8) TMI 322X X X X Extracts X X X X X X X X Extracts X X X X ..... n after knowing about their liability for the same. Thus, extended period of limitation is applicable in the facts and circumstances of this case. Demand of interest - HELD THAT:- Since the demand of tax has been upheld the demand for interest will follow. It is now settled law that interest under Section 75, is for delay in the payment of tax from the date when it was due. Since appellants have failed to pay the said Service Tax by the due date interest demanded cannot be faulted. Penalty u/s 78 - HELD THAT:- It is now settled position in law that penalty under section 78 can be imposed only if the ingredients specified in the said section are present. The ingredients specified for invoking the Section 78 are identical to those specified for invoking the extended period of limitation as provided by Section 73 ibid. Since in respect of show cause notice, the demand could have been made by invoking the extended period of limitation as provided by Section 73, we uphold the penalties imposed under Section 78 of The Finance Act, 1994. Penalty u/s 76 and 77 of FA - HELD THAT:- Penalty under Section 76 of the Act is imposed for failure to pay Service Tax by the due date - By not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09.09.2004: imposed a penalty of ₹ 200/- for every day. ii) from 10.04.2006 to 17.04.2006: a penalty of one hundred rupees for every day which such failure continues, however, the penalty under the clause shall not exceed the amount of service tax that he failed to pay. iii) from 18.04.2006 to 15.05.2008: a penalty of two hundred rupees for every day or at rate of two percent of such tax per month, whichever is higher, starting with the first day after the due date till the date of actual payment of the outstanding amount of service tax. c) I impose a penalty of ₹ 5000/- (Rupees Five Thousand Only) on M/s Pearl Logistics Services, under provisions of Section 77 of the Finance Act, 1994, as applicable at the relevant period. 46. The remaining demand of ₹ 30,22,382/- (₹ 2,33,34,968/- - ₹ 2,03,12,586/-) raised in the impugned SCNs is dropped. 2.1 Acting on intelligence that Appellants were providing Cargo Handling Services and were evading Service Tax as they had not obtained any Service Registration nor paid any service tax due on the services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on them as provided for under section 78 of the said Act; ii. dated 22.04.2010 was issued on the same grounds demanding service tax of ₹ 13,25,809/- covering the period from October 2008 to September 2009. 2.2 Both the show cause notices have been adjudicated by the Commissioner as per the impugned order referred in para 1, supra. 2.3 Aggrieved by the order of Commissioner, appellants have preferred this appeal. 3.1 Appellants have in their appeal challenged the impugned order on following grounds- They had on the invoices shown handling and transportation charges separately and thus were entitled for exemption transport of goods by road service , where the charge is less than ₹ 750 as per notification No 34/2004-ST. They have supported the claim by way of sample invoices and certificate from Chartered Accountant. However such claim has been ignored by Commissioner. Commissioner has stated that dominant nature of the service was cargo handling and hence has included this value in the value of taxable services, contrary to the clarification issued vide F No B1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e demand of ₹ 30,22,382/- relatable to Export Cargo Handling. However he has not extended the same benefit in respect of Pure transportation of containers containing import cargo without involving provision of cargo handling services and only transportation and handling of empty containers. Commissioner has failed to give the benefit of cum tax value while confirming the demand against them in respect of cargo handling services. Contrary to decision of tribunal in case of Advantage Media Consultant [2008 (10) STR 449 (T-Kol)]. He has extended the said benefit in respect of Their submissions on limitation have not been considered by the Commissioner and no justification given by the Commissioner for invoking extended period of limitation. They rely on the decisions in case of Gajanand Agarwal [2009 (13) STR 138 (TMum)] Vishal Traders [2010 (19) STR 509 (T-Del)] They are seeking relief to the extent of deduction of charges respect of pure transportation of containers containing import cargo without involving provision of cargo handling services and only transportation and handling of empty containers amounting to ₹ 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rightly invoked. [Star India Pvt Ltd [2015 (38) STR 884 (T-Mum)] 5.1 We have considered the impugned order along with the submissions made in appeal and during the course of hearing of appeal. 5.2 Appellants do not dispute with regards to levy of service tax in respect of taxable services rendered by them under the taxable category of Cargo Handling Services for the import cargo. However the dispute is in manner of calculation of taxable value for such services. Relying on the definition of Cargo handling Services and various clarifications issued by the Board they contest inclusion of following amounts charged by them in the value of taxable services provided by them:- i. Towards mere transportation of containers containing import cargo without involving provision of cargo handling services. (₹ 6,61,86,181/-) ii. Towards transportation and handling of empty containers. (₹ 66,23,775/-) 5.3 Appellants have submitted that for excluding these charges from the taxable value, they had furnished the certificate from Chartered Accountant, certifying that these amounts should not have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,04,16,287 51,52,302 19,60,979 15,85,721 17,17,285 Total 22,52,57,586 3,99,61,772 10,59,80,749 7,28,09,956 6,505,109 The exemption to the charges incurred for transportation of goods as claimed in the Certificate of Chartered Accountant is not allowable for import component because as has been held above that this amount is part of the cargo handling services of the noticee. The dominant activity is of cargo handling and the transportation being incidental an being composite part of the service of cargo handling. Secondly, the noticee has taken the figure of transportation charges just on presumptive basis as they themselves have replied that they have requested the CWC for the breakup of transportation cost, however the CWC has not provided the same. In any case as discussed earlier it is not mere transportation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10.20 290196 7 18.04.06 to 30.09.06 31189718 34571569 0 34571569 12.24 4231560 8 01.10.06 to 31.03.07 17889348 21818071 7168078 14455494 12.24 1769352 9 01.04.07 to 10.05.07 1436636 1987427 0 1987427 12.24 243261 10 11.05.07 to 30.09.07 6686160 5552452 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... des,- cargo handling services provided for freight in special containers or for non-containerized freight, services provided by a container freight terminal or any other freight terminal, for all modes of transport and cargo handling services incidental to freight, with or without one or more of other services like loading unloading, unpacking but does not include handling of export cargo or passenger baggage or mere transportation of goods; 5.5 From the definition itself it is quite evident that during the period under dispute, cargo handling services excluded the handling of export cargo; handling of passenger baggage; mere transportation of goods. Commissioner has allowed the benefit in respect of handling of export cargo. While in respect of the import cargo while appellants sought to deduct the value toward the transportation of goods, the same was and allowed by him. The reason as per the impugned order is that the services provided are not mere transportation of goods but is associated with the handling of import cargo. As per the tender/ contract between the appellant and the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nner which does not cause damage to the container or its cargo and this operation shall be performed to the satisfaction of the authorities. The cargo de-stuffed at the Import Warehouse/Open Yard shall be inventorised/segregated and neatly arranged consignment-wise to tally with Ocean Bills Of Lading, Import General Manifest, Packing List, Invoices and other relevant documents. The empty container after de-stuffing shall be shifted to the empty container yard or any other location in the Multipurpose Warehousing Complex by suitable mechanical equipment and stacked up to three high: 1(a) The contractor shall provide types of road vehicle in good working condition for transportation of containers at JNPT/NSICT, Container Yard when required, and take over the loaded containers placed on such road vehicles by JNPTINSICT operators after due inspection of all locks/seals and the condition of the container and on completion of all other formalities including preparation of EIR (Equipment Interchange. Report). (Where a container has been found damaged or with seals/locks tampered or whose contents appear to have been damaged shall be taken over from the JNPTINSICT opera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CFS within 10 KM radius from Multipurpose Warehousing Complex. The transportation of empty containers shall be completed within 24 hours of the date and time of issue of Job Order, failing which the Regional Manager, CWC, Container Freight Station, Jawaharlal Nehru Port, Navi Mumbai shall have the right to impose the liquidated damages on the contractors on TEU basis at the highest slab of the ground rent as per tariff applicable to trade for empty containers besides imposing the penalty of ₹ 200/- per TEU per day on the contractor including the consequential damages. The decision of the Regional Manager, CWC, Container Freight Station, Jawaharlal Nehru Port, Navi Mumbai shall be final and binding on the contractor in this regard. 2. The contractor shall provide suitable types of road vehicles at JNPT/NSICT container yard as and when required and take over loaded containers placed on such road vehicles by INPT/NSICT operators, after due inspection of locks/seals and the condition of the container and on completion of all formalities including preparation of Equipment Interchange Report (ElR), and transportation to the Multipurpose Warehousing Complex witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal recovery as mentioned above, which shall be final and binding on the contractors in this regard. 3. The contractor shall arrange de-stuffing of the loaded containers stacked in the open yard by grounding these from any of the three heights, wherever necessary for facilitating customs examination in the presence and under supervision of customs officials, shipping lines/agents and Central Warehousing Corporation Officials, and stuffing if back in to the same or other container and/or loading it on to the road vehicles of the importer/CHA/SA provided at the Complex. The container shall be de-stuffed in a manner which-does not cause damage to the container or its cargo. and this operation shall be performed to the satisfaction of the authorities. The loaded/empty container, as the case may be, shall have to be stacked in the Container Yard of up to three high. The contractor shall ensure deliveries/de-stuffing of all the containers for which the issue slips are given for a particular day failing which the penalty of ₹ 200/- per TEU per day including the amount equivalent to consequential damages shall be imposed by the Regional Manager, Jawaharlal Nehru P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C, Container Freight Station, Jawaharlal Nehru Port, Navi Mumbai shall have the right to impose the liquidated damages on the contractors on TEU basis at the highest slab of the ground rent as per tariff applicable to trade for empty containers besides imposing the penalty of ₹ 200/- per TEU per day on the contractor including the consequential damages. The decision of the Regional Manager, CWC, Container Freight Station, Jawaharlal Nehru Port, Navi Mumbai shall be final and binding on the contractor in this regard. 4. The contractor shall provide suitable types of mechanical equipment for de-stuffing the container or after grounding or after retrieval of loaded container (which may include transportation within the complex) as the need be, in the presence of customs, shipping lines/agents and under the supervision of officials, after following prescribed procedure. On completion of all the laid down formalities, all the containers decided to be de-stuffed shall be got de-stuffed immediately. The contractor shall be responsible for any delay in getting these containers de-stuffed. The Regional Manager, Container Freight Station, Jawaharlal Nehru Port, Navi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e empty containers after de-stuffing shall be shifted/transported to Multipurpose Warehousing Complex CWC, D. Node, Sector- 7/any other empty container yard/any other CFS within 10 KM radius from Multipurpose Warehousing Complex. The transportation of empty containers shall be completed within 24 hours of the date time of issue of job order, failing which the Regional Manager, CWC, Container Freight Station, Jawaharlal Nehru Port, Navi Mumbai shall have the right to impose the liquidated damages on the contractors on TEU basis at the highest slab of the ground rent as per tariff applicable to trade for empty containers besides imposing the penalty of ₹ 200/- per TEU per day on the contractor including the consequential damages. The decision of the Regional Manager, CWC, Container Freight Station, Jawaharlal Nehru Port, Navi Mumbai shall be final and binding on the contractor in this regard. From the, contract itself it is quite evident that, the services provided and agreed to be provided cannot be said to the services in respect of handling mere transportation of goods. This is what has been held by the Commissioner. We also find that the entire tender/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evel had passed the bills raised by us and no official had raised the objections on the bills raised by us. 5.6 From the facts as stated above it is quite evident that there is no breakup of charges towards transportation of goods and other services available as part of contract documents between the appellants and M/s CWC. It is also evident that M/s CWC had not provided any breakup even afterwards. What appellant claims is that there were certain breakups agreed during the negotiations between them and M/s CWC. But we find what so ever appellants claim is not part of the agreement/ contract documents. Then what is factual basis for claiming such breakup. Commissioner has called this breakup as only presumptive and we do not find any reason to differ with the same. In case of Gajanand Agarwal [2009 (13) STR 138 (T-Kol)] following has been held 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 brought all like natur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of cargo in the manner envisaged by law. It is also not necessary that the cargo should only be meant for transport either by vessel in ships or aircrafts. Further Tribunal has in case of J K Transport [2006 (2) STR 3 (T-Del)] rejected the argument raised by the appellant in respect of levy of service tax treating him as an individual stating as follows: 2. The only contention is of the appellants is that they are not covered under the definition of Cargo Handling Services in view of the Central Board of Excise and Customs Circular F. No. B/1/2002-TRU, dated 1-8-2002. We have gone through the Board Circular, which provides as under : Another doubt raised in relation to cargo handling services is that whether individuals undertaking the activity of loading or unloading of cargo would be leviable to service tax. For example, if someone hires labour/labourer for loading or unloading of goods in their individual capacity, whether he would be liable to service tax as a cargo handling agency. It is clarified that such activities will not come under the purview of service tax as a cargo handling agency . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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. From the above it follows that necessity of law for taxation under the class cargo handling service is that the service provided should be relating to or in relation to cargo handling by a cargo handling agency. The service provided should be integrally or inseparably connected with handling of cargo or attributable thereto without being a mere activity of transportation of such cargo since transport service independent of cargo handling is an exception under the scheme of levy by Section 65(23) of the Act. Thus it can be said that loading, unloading, packing or unpacking 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 fre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t this contention raised by the appellant in toto. 5.8 In para 9.3 of Show Cause Notice wherein the statement dated 26.11.2018 of Shri Jainendra Jha, Executive Director Authorized Signatory of Appellants is discussed following is stated: On perusal of the above mentioned amounts as per ST-3 returns filed by them and the amount of billing as per data furnished by CWC, he agreed there was a vast difference between the two figures; that he was shown invoices raised by M/s Pearl Logistics on CWC in connection with services rendered under Cargo Handling . S No Bill No/ Date Gross Amount (Rs) Service Tax (Rs) 1 PLS/CWC/12/04-05 Dt 01.01.04 4,48,683 45,766 2 PLS/CWC/13/04-05 Dt 01.10.04 2,05,33,318 2,09,438 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re; that as regards the data and copies of ST-3 returns as called for vide Summons dated 06.01.09, he stated that since they had not filed the ST-3 returns they could not produce the same .. 5.10 From the facts as stated above it is quite evident that appellants were charging the service tax from their customer and not depositing the same with the government. They were also not filing the Service Tax returns even after knowing about their liability for the same. Thus in our view extended period of limitation is applicable in the facts and circumstances of this case. In case of Capital Transport Convoy Contractor [2016 (41) STR 651 (T-Del)], tribunal has in similar circumstances held as follows: 9. The appellant has contended that extended period cannot be invoked in respect of impugned order in appeal dated 25-2-2013 as the said order was in respect of show cause notice demanding Service Tax on same activity for subsequent period and cited the Supreme Court judgment in the case of Nizam Sugar Factory to support this proposition. While on the face of it there seems to be some traction in this contention, on closer examination we fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in the case of foreign advertisers the consideration was paid directly to Star Hong Kong, there cannot be any misdeclaration on their part. This contention is obviously wrong. In the ST-3 return, there was a column wherein the appellant was required to declare the amount charged to the service recipient, apart from the amount received. As per the agreement, dated 1-4-1999, SIPL was appointed as non-exclusive independent representative in the territory of India to solicit television advertising for the channels, namely, Channel V, Star World, Star Plus, Star News, Star Movies and such other channels as may be added in future and to collect and remit advertisement charges. The responsibility also included delivery of the invoices to the advertisers on a timely basis. Thus the appellant obviously knew the amount charged for the broadcasting services. Section 70 of the Finance Act, 1994, mandated that - Every person liable to pay the Service Tax shall himself assess the tax due on the services provided by him and shall furnish to the Superintendent of Central Excise, a return in such form and in such manner and at such frequency as may be prescribed. Thus the appellant was opera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion, etc., comes to the knowledge of the Department. In simple terms, the Department could recover unpaid duty up to a period of five years anterior to the date of service of notice when the case falls under proviso to sub-section (1) and such omission is on account of fraud, collusion, wilful misstatement, etc. Thus in our considered view, the invocation of extended period of time for confirmation of demand is fully justified and we hold accordingly. Hence we uphold the impugned order for invoking extended period of limitation. 5.11 Since the demand of tax has been upheld the demand for interest will follow. It is now settled law that interest under Section 75, is for delay in the payment of tax from the date when it was due. Since appellants have failed to pay the said Service Tax by the due date interest demanded cannot be faulted. In case of P V Vikhe Patil SSK [2007 (215) ELT 23 (Bom)] Hon ble Bombay High Court has stated as follows: 10. So far as interest u/s. 11AB is concerned, on reference to text of Section 11AB, it is evident that there is no discretion regarding the rate of inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at penalty under section 78 can be imposed only if the ingredients specified in the said section are present. The ingredients specified for invoking the Section 78 are identical to those specified for invoking the extended period of limitation as provided by Section 73 ibid. Since in respect of show cause notice, we hold that demand could have been made by invoking the extended period of limitation as provided by Section 73, we uphold the penalties imposed under Section 78 of The Finance Act, 1994. Hon ble Supreme Court has in case of Rajasthan Spinning and Weaving Mills [2009 (238) ELT 3 (SC)] held as follows: 23. The decision in Dharamendra Textile must, therefore, be understood to mean that though the application of Section 11AC would depend upon the existence or otherwise of the conditions expressly stated in the section, once the section is applicable in a case the concerned authority would have no discretion in quantifying the amount and penalty must be imposed equal to the duty determined under sub-section (2) of Section 11A. That is what Dharamendra Textile decides. 5.13 In view of various decisions of High Court/ Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration the nature of the penalty, which is punitive, no sentence can be imposed under that provision unless the element of mensrea is established. In most cases of criminal liability, the intention of the Legislature is that the penalty should serve as a deterrent. The creation of an offence by Statute proceeds on the assumption that society suffers injury by and the act or omission of the defaulter and that a deterrent must be imposed to discourage the repetition of the offence. In the case of a proceeding under Section 271(1)(a), however, it seems that the intention of the legislature is to emphasise the fact of loss of Revenue and to provide a remedy for such loss, although no doubt an element of coercion is present in the penalty. In this connection the terms in which the penalty falls to be measured is significant. Unless there is something in the language of the statute indicating the need to establish the element of mens rea it is generally sufficient to prove that a default in complying with the statute has occurred. In our opinion, there is nothing in Section 271(1)(a) which requires that mens rea must be proved before penalty can be levied under that provision. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not to impose penalty on the assessee if the assessee proved that there was reasonable cause for the said failure in respect of one or both of the offences. However, no circumstances are either pleaded or proved for invocation of the said Section also. In any event we are not satisfied that an assessee who is guilty of suppression deserves such sympathy. As such, we are of opinion that the learned Single Judge was not correct in directing the 1st appellant to modify the demand withdrawing penalty under S. 76. Therefore, the judgment of the learned Single Judge, to the extent it directs the first appellant to modify Ext. P1 by withdrawing penalty levied under S. 76, is liable to be set aside and we do so. The cumulative result of the above findings would be that the Writ Petitions are liable to be dismissed and we do so. However, we do not make any order as to costs. Same view was again expressed by Kerala High Court in case of Lawson Travel and Tours (I)(P) Ltd [2015 (37) ELT 183 (Ker)] as follows: 5. What we notice is, the liability to pay Service Tax is in accordance with the Finance Act, 1994, as the taxable services involved ..... X X X X Extracts X X X X X X X X Extracts X X X X
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