Whether activity of transportation and stacking of products within the stockyard premises of the customer be liable to service tax?

PJ/Case Laws/2012-13/1366

Case:-I. A. DHAS Versus COMMISSIONER OF CENTRAL EXCISE, RAIPUR

Citation:- 2012 (28) S.T.R. 630 (Tri. – Del.)

Brief Facts:-As per the agreement entered into by M/s. SAIL, the appellant were required to do the activity of loading, unloading, transportation and stacking of various iron and steel products within the stockyard of M/s. SAIL. It is seen that initially the department was of the view that the appellant's activity fall under the category of 'cargo handling services' and issued a Show Cause Notice (SCN), dated 2-4-2003 to the appellant raising demand of duty for the period 6-8-2000 to 31-12-2002. The said SCN was adjudicated by the Asstt. Commissioners vide his order dated 5-5-2003. It is seen from the said order that as the service tax was paid by the appellant prior to the issuance of the SCN, the same was confirmed along with confirmation of interest but keeping in view the bona fides of the appellant, no penalty was imposed. The said order was passed by the Asstt. Commissioner was accepted by the appellant as also by the Revenue. The adjudicated order confirmed service tax only on loading and unloading activity of the assessee and so the assessee also paid service tax on the loading and unloading activity for subsequent periods. Thereafter, another SCN was issued to the assessee wherein service tax was also levied on the activity of transportation and stacking of products done in the stockyard of M/s SAIL by invoking extended period of limitation along with penalties under section 76 & 78 of the Finance Act. Hence, the assessee is in appeal.

Appellant Contentions:-The Appellant submits that applicant were raised separate bills for all the four activities, and the adjudicated order of the Asstt. Commissioner only confirmed demand for the activity of loading and unloading. The appellants have contested the said demand on merits as also on limitation. The appellants' contention is that the earlier order of the Asstt. Commissioner dated 5-5-2003 confirmed the service tax only on loading and unloading and after the said order, they started paying service tax on the said activity. In as much as the Asstt Commissioner himself did not confirm the demand on the activity of transportation and stacking, the appellants cannot be held guilty of any suppression for non-payment of service tax on the said activity for the subsequent period. Further, they place reliance on the following cases wherein service tax cannot be demanded on the said activity:

·         B.K. Thakkarreported in 2008 (9) S.T.R. 542 (Tri.- Kol.)
·         S.B. Construction Co.reported in 2006 (4) S.T.R. 545 (Raj.)
·         Modi Construction Co.reported in 2011 (23) S.T.R. 6 (Jhar.)
·         Coal Carriers reported in 2011 (24) S.T.R. 395
·         Anupam Coal Carriers P. Ltd. & Others, Final Order Nos. ST/A/143-154/12 - Cus., dated 23-2-2012.

Respondent Contentions:-The Respondent submits cross objections wherein it stands contended that appellants while showing the activities in their ST-3 returns, never disclosed about raising of separate bills and as such Revenue never came to know about the value of the services being rendered by them separately. They contended that appellant also admitted in their statement that value realised for transportation and stacking of goods were not being reflected in ST-3 returns.

Reasoning of Judgment:-Tribunalfound from the said order of the Asstt. Commissioner that there is nothing to clarify that the demand was confirmed only on the value of the services pertaining to loading and unloading, but we note that the said contract dated 13-7-1998 was the subject matter of adjudication in the above order of the Asstt. Commissioner. The said contract dated 13-7-1998 continued till May, 2003 and subsequently a fresh contract on the same terms & conditions but with different value was executed. The appellant after passing of the order of the Asstt. Commissioner started paying duty on the value of the loading and unloading. Subsequently the appellants were issued SCN on 26-3-1999 for the period 2003-04 upto November, 2007 alleging that they were required to pay service tax on the consideration received for transportation of the goods within the stockyard as also for stacking of the same. It is seen that part of the said period covered the earlier agreement dated 13-7-1998 (upto May, 2003) and thereafter new agreement dated 5-5-2003. Another SCN was issued on 9-4-2009 for the period December, 2007 to March, 2008. Both the SCNs stands adjudicated by the Commissioner vide his impugned order confirming Service tax and penalty of identical amount imposed under each of Sections 76 & 78 of the Finance Act. As we have already discussed that as entire agreement was the subject matter of earlier SCN, the appellants were not reflecting the value of transportation and stacking in their ST-3 returns in terms of earlier order of the Asstt. Commissioner. As such nothing turns on the said fact which stands admitted by the appellants. It is well settled that for invocation of extended period, the material facts are required to be suppressed or misstated with guilty mind, i.e., with intention to evade payment of tax/duty.

In the instant case, as we have already noticed that the agreement was before the department and the subsequent agreements were on the same lines, no mala fide can be attributed by the appellants by any state of imagination. We also note that part of the demand covered by the SCN dated 26-3-2009 relates to the same agreement which was the subject matter of the order of the Asstt. Commissioner. The subsequent agreement is also' on the same terms. As such the appellants cannot be held guilty of any malafide, misstatement or suppression, by acting on the basis of views expressed by the Asstt. Commissioner in his earlier order 5-5-2003. The entire facts were in the knowledge of the Revenue and as such we are of the view that extended period was not available for issuance of demand. We accordingly hold the demand to be barred by limitation. As such we hold that as the demand covered by both the SCNs are by invoking the extended period of limitation, the same are barred.

In any case we note that the appellants have a good case on merits. The activity of transportation and stacking was within the stockyard premises. Number of Tribunal's decisions have held that such activity cannot be held to be covered by the activity of 'cargo handling services'. Reference can be made to Tribunal's decision in the case of B.K. Thakkar reported in 2008 (9) S.T.R. 542 (Tri.- Kol.) as also Hon'ble Rajasthan High Court's decision in the case of S.B. Construction Co. reported in 2006 (4) S.T.R. 545 (Raj.) and in the case of Modi Construction Co. reported in 2011 (23) S.T.R. 6 (Jhar.). Appellant has also made a reference to Hon’ble Orissa High Court's decision in the case of Coal Carriers reported in 2011 (24) S.T.R. 395 which we find stands considered by the Tribunal in the case of Anupam Coal Carriers P. Ltd. & Others, Final Order Nos. ST/A/143-154/12 - Cus., dated 23-2-2012.

In view of the foregoing, we set aside the impugned order and allow both the appeals with consequential relief to the appellants. Cross Objections which are in the form of written submissions are also disposed of.

Decision:-Appeal allowed.

Comment:- The substance of the case is that when the agreement which was the basis for confirming demand was in the knowledge of the department, then extended period could not be invoked as there was no suppression of facts.

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PJ/Case Laws/2012-13/1366

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