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2019 (8) TMI 322

..... ded and agreed to be provided cannot be said to the services in respect of handling mere transportation of goods - HELD THAT:- 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. Extended period of limitation - HELD THAT:- 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, 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 d .....

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..... with section 68 of the Act and Rule 6 of the Service Tax Rules, 1994 as amended. b. Interest on the amount of demand determined at a) at the appropriate rate should be paid by M/s Pearl Logistics Services under Section 75 of the Act; 45.a. I impose a penalty of ₹ 2,03,12,586/- (Rupees Two Crore Three Lakhs Twelve Thousand Eight Hundred and Nine Only) on M/s Pearl Logistics Services under provisions of Section 78 of the Finance Act, 1994. b. for the period prior to 16.05.2008, I also impose a penalty under Section 76 of the Finance Act, 1994 on M/s Pearl Logistics Services as follows: i) from Oct 03 to 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. .....

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..... 76 of the said Act should not be imposed on them; vii) The penalty for contravention of any provision of the said Act or any rule made there under should not be imposed on them as provided for under section 77 of the said Act; viii) The penalty for suppressing the value of taxable services with an intent to evade payment of ST should not be imposed 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 su .....

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..... - 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 ₹ 7,28,09,956/- from total taxable value of cargo handling services determined by t .....

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..... pect 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 formed the part of taxable value. However Commissioner has rejected the submissions made by tem stating that- 40.1 I observe that the noticee has submitted the Certificate from the Chartered Accountant certifying the data, same is tabulated below: Sr No Financial Year/ Period Total amount billed (in Rs) Excluding Service Tax Amount billed towards cargo hand .....

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..... 31 0 5368954 12.36 663603 Total 200384439 210096252 34809470 175049506 19158627 01.10.08 to 31.12.08 8996670 8941379 5152302 3546700 12.36 438372 Grand Total 209381109 219037631 39961772 178596206 19597001 5.4 Definition of Cargo Handling Services as per Section 65(23) of the Finance Act, 1994 from time to time is as follows: Period 16.08.2002 to 15.05.2008 "Cargo Handling Service" means loading, unloading, packing or unpacking of cargo and includes cargo handling services provided for freight in special containers or for non-containerized freight, services provided by a container freight terminal or nay other freight terminal, for all modes of transport and cargo handling services incidental to freight, but does not include handling of export cargo or passenger baggage or mere transportation of goods; From 16.05.2008 onwards "Cargo Handling Service" means loading, unloading, packing or unpacking of cargo and includes,- 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 incidenta .....

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..... ipurpose Warehousing Complex, the contractor shall hand over the container to the authorities duly satisfying the condition of the seals, and locks of the container as shown in the Equipment Interchange Report and arrange for immediate de-stuffing of the container or after grounding, as the need be, in the presence of customs, shipping lines/agents and under the supervision of officials after following the prescribed procedure at the designated point. The container shall be de-stuffed within two clear working shifts excluding the shift of arrival failing which the penalty as deemed fit (minimum penal charges shall be equivalent to one week grid charges as per the tariff of the Unit, for 5 grids per TEU) shall be imposed. The container shall be destuffed 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 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 s .....

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..... d this operation shall be performed to the satisfaction of the Multipurpose Warehousing Complex authorities. The cargo de-stuffed at the Import Warehouse/Open Yard shall be inventoried/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 Container Freight Station by suitable mechanical equipment and stacked up to three high. The empty containers after de-stuffing shall be shifted/transported to Multipurpose Warehousing Complex, CWC, D'Node/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 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 pena .....

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..... et shall be made by the Regional Manager at his sole discretion by giving one month notice. The decision of the Regional Manager, Jawaharlal Nehru Port, Navi Mumbai shall be final and binding on the contractor in this regard. Nevertheless, the payment shall be made on actual in case the volume of work is less than 100 TEUS per day. The contractor shall provide suitable type of road vehicles and transport loaded containers between the and Container Yard of JNPT/NSICT, on completion of all formalities as and when required, with in a period of 24 hours of the date and time of issue of job order. Any delay caused for such movement shall attract penal 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 .....

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..... the transaction schedule for particular day are not hampered. The decision of the Regional Manager, Container Freight Station, Jawaharlal Nehru Port, Navi Mumbai shall be final and binding on the contractor in this regard. The 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. 4. The contractor shall provide suitable types of mechani .....

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..... tractor shall be solely responsible and liable to fully compensate the damages caused. The cargo de-stuffed shall be inventoried/segregated and neatly arranged consignment-wise in the nominated stack/grid, to tally with the OBL/IGM/Packing List/Invoice and other relevant documents. The cargo, thereafter shall be stacked in the import cargo unit/open yard by using appropriate handling equipment. The empty container after de-stuffing shall be shifted to the Empty Container Yard or any other location in the Multipurpose Warehousing Complex and stacked up to three high. The 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 con .....

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..... to M/s CWC, but service tax is charged only on the handling portion in the bill and on that basis we have worked the amount of transport charges, during the period under dispute and shown in the statement and necessary Chartered Accountant Certificate is obtained. The said certificate is already enclosed as Annexure G . According to which the transport element in the total amount worked out to ₹ 7,28,09,956/- during the period from October 2003 to December 2008. Moreover, the various officials of M/s CWC, working at each level 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. C .....

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..... inal 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 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 unloa .....

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..... : (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. 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 freight of cargo is also liable to .....

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..... a 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 PLS/CWC/15/04-05 Dt 16.10.04 16,10,274 94,535 4 PLS/CWC/28/04-05 Dt 17.01.05 1,85,55,645 No ST Charged 5 PLS/CWC/30/04-05 Dt 01.02.05 20,96,962 No ST Charged 6 PLS/CWC/34/04-05 Dt 28.02.05 16,05,622 94,843 7 PLS/CWC/04/04-05 Dt 28.02.05 60,360 6,157 That on perusal of the same he agreed that ST was charged by them in the bills dated 01.04.04, 16.10.04 and 28.02.05 raised on CWC, that however, no ST was charged by them in the bills raised on 17.01.05 and 01.02.05; that on being asked about the reason for the practice of charging ST in certain bills and not charging ST in certain bills in the intervening period he state .....

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..... 8 to September, 2008 vide letter dated 26-11-2008. It was followed by reminders dated 14-1-2009, 26-2-2009, 2-3-2009, 12-3-2009 and 26-3-2009. The appellant sent reply dated 9-4-2009 vide which it merely forwarded ST-3 return for the period April, 2008 to September, 2008 which too was incomplete. Revenue again reminded for supply of information vide letter dated 16-4-2009 followed by reminder dated 6-5- 2009, in response to which vide letter dated 18-5-2009 it provided figures of gross amount received only for the period January, 2008, February, 2008 and March, 2008 without mentioning the amount of Service Tax leviable or paid. This behaviour of the appellant manifestly shows suppression of facts on its part as it did not provide the requisite information required for computing Service Tax liability for issuing show cause notice in spite of numerous reminders over a period of several months. Therefore, the judgment of Supreme Court in Nizam Sugar Factory (supra) is not applicable in the present case as that judgment was in relation to central excise duty involving manufacture of sugar in a factory where identical issue and facts were in the knowledge of Revenue for issuance of the .....

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..... regard to the services rendered to the foreign advertisers. Therefore, the ratio of the decision of the Hon ble Apex Court in the case of Madras Petrochem Ltd. (supra) relied upon by Revenue would squarely apply. In the said decision, the Hon ble Apex Court had held as follows :- 14. The proposition of law as laid down is not in dispute. We find in the present case as aforesaid, a clear finding was recorded that the petitioner was aware and was obliged to file RG 1 Register, gate passes and also of clearances in the RT 12 returns by disclosing the particulars which was not done in the present case. The finding recorded in this case, especially in the background that this was a case of self-removal procedure in which there is obligation cast on the assessee to make proper and correct declaration and entries in the production register RG 1. Further finding was that it was not by inadvertence. There could be no other inference if it was not by inadvertence, then deliberate, then it is not in the realm of inaction of the assessee but with the objective of a gain, which in other words would be conscious withholding of the information. Thus unhesitantly we conclude, on the facts of this .....

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..... rom time to time. There would be discretion, if at all the same is incorporated in such notification in the gazette by which rates of interest chargeable u/s. 11AB are declared. The second aspect would be whether there is any discretion not to charge the interest u/s. 11AB at all and we are afraid, language of Section 11AB is unambiguous. The person, who is liable to pay duty short levied/short paid/non-levied/unpaid etc., is liable to pay interest at the rate as may be determined by the Central Government from time to time. This is evident from the opening part of sub-section (1) of Section 11, which runs thus : Where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded, the person, who is liable to pay duty as determined under sub-section (2) or has paid the duty under sub-section (2B) of Section 11A, shall in addition to the duty be liable to pay interest at such rate ........ The terminal part in the quotation above, which is couched with the words shall and be liable clearly indicates that there is no option. As discussed earlier, this is a civil liability of the assessee, who has retained the amount of public exchequer .....

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..... civil penalties and are imposed in cases where the person who by his act of omission or commission has failed to fulfill the obligations cast on him under the statue. Hon ble Supreme Court has in case of Gujarat Travancore Agency [1989 (42) ELT 350 (SC)] held as follows: 4. Learned Counsel for the assessee has addressed an exhaustive argument before us on the question whether a penalty imposed under Section 271(1)(a) of the Act involves the element of mens rea and in support of his submission that it does he has placed before us several cases decided by this Court and the High Courts in order to demonstrate that the proceedings by way of penalty under Section 271(1)(a) of the Act are quasi criminal in nature and that, therefore, the element of mens rea is a mandatory requirement before a penalty can be imposed under Section 271(1)(a). We are relieved of the necessity of referring to all those decisions. Indeed, many of them were considered by the High Court and are referred to in the judgment under appeal. It is sufficient for us to refer to Section 271(1)(a), which provides that a penalty may be imposed if the Income Tax Officer is satisfied that any person has without reasonable .....

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..... am Mutual Fund [2006-TI0L-72- SC-SEBI] the Hon ble Apex Court held that mensrea 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. 5.15 Penalty under Section 76 of the Act is imposed for failure to pay Service Tax by the due date. Kerala High Court has in case of Krishna Poduval {2006 (1) STR 185 (Ker)] held follows: 11. The penalty imposable under S. 76 is for failure to pay service tax by the person liable to pay the same in accordance with the provisions of S. 68 and the Rules made thereunder, whereas S. 78 relates to penalty for suppression of the value of taxable service. Of course these two offences may arise in the course of the same transaction, 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 imposabl .....

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..... t they are not liable to pay Service Tax and that there is justification in the defence raised by them regarding refund of the amounts. Accordingly, the appeal is dismissed. Tribunal has in case of Checkmate Industries Services [2016 (44) STR 290 (T-Mum)]] held as follows: 5.4 With regard to penalties imposed on the appellant, penalty under Section 76 is imposed for default in payment of tax and, no mensrea is required to be proved for imposing such penalty. For mere default and delay in payment of tax, the liability to penalty arises. The Hon ble High Court of Kerala in the case of Asst. Commissioner of Central Excise v. Krishna Poduval - 2006 (1) S.T.R. 185 (Ker.) has held that penalty under Section 76 of the Finance Act, 1994 can be imposed for mere default/delay in payment of Service Tax in addition to the penalty under Section 78 and these penalties are mutually exclusive and even if offences are committed in the course of same transaction or arise out of same act, penalty is imposable for ingredients of both offences. 5.16 By not taking registration, paying the service tax by due date and not filing ST-3 returns by the due date appellants have contravened the provisions of Se .....

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