Whether transportation of coal including loading into trucks classifiable under cargo handling or GTA service?

PJ/Case law/2013-14/1907

Case:- OM SHIV TRANSPORT VERSUS COMMISSIONER OF CENTRAL EXCISE, ALLAHABAD

Citation:- 2013 (31) S.T.R. 152 (Tri. – Del.)

Brief facts:-The facts of the case are as under:-

Since these appeals involve substantially similar facts and invite reference to identical statutory provisions, we consider it appropriate to dispose of these appeals by a common order. The assessee/appellants are aggrieved by adjudication orders passed by the Commissioner of Central Excise, Service Tax, Allahabad on different dates. Assessees are in the business of transportation of coal in tipping trucks from coal stockyard of Northern Coal Fields Ltd. (NCL) including loading of coal into tipping trucks and railway wagons by employing their own pay loaders apart from manual breaking of coal to the stipulated sizes. For the period 1-1-2005 to 30th September, 2006, NCL was assessed and levied service tax, interest and penalties on these transactions treating the service provided by the assessees and others and received by NCL as the service of transport of goods by road, defined Section 65(105)(zzp) read with Section 65(50b). The adjudication order dated 9-1-2008 in respect of NCL was passed pursuant to the Show Cause Notice dated 20-9-2007 issued to NCL under Section 68(2) of the Finance Act, 1994 (the Act) read with Rule 2(1)(d)(v) of Service Tax Rules, 1994 whereby NCL, the recipient of the service of transport of goods by road, is liable to remit Service Tax. It is stated before Tribunal that the order of assessment (adjudication) dated 9-1- 2008 in respect of NCL treating the service provided by the appellants as the service of transport of goods by road, has become final.

Appellant’s contention:- The appellants contends that these services clearly fall in the category of "transport of goods by road" under Section 65(106)(zzp) as defined under Section 65(50b). Reliance is placed by the ld. Consultant on the Board Circular dated 6-8-2008 bearing reference F. No. 137/175/2007-CX.4. The appellant/assessee specifically pleaded before the adjudication authority that transportation of coal is done by transport contractors registered under Service Tax Act and service tax under the service category "transport of goods by road" was levied on and remitted by NCL; and Service Tax cannot be charged twice in respect of the same service; transaction and value thereof which is already subjected to levy and collection of tax. The adjudication authority was also intimated the fact that an adjudication order dated 9-1-2008 was passed against NCL in respect of the same transaction treating the same as the taxable service of "transport of goods by road". The Appellant also added that the several adjudication orders do not disclose any analysis either regarding bar of limitation nor any coherent analysis regarding the contention that the service having already been classified/assessed and service tax levied, treating the service as "transport of goods by road" ought not to be assessed and service tax levied under the category "cargo handling services". The adjudication authority (by order dated 12-1-2009 in the case of Om Transport) has recorded a non-sequitor viz, that the Commissioner (adjudication authority in respect of NCL) is an independent authority within his jurisdiction; that the adjudication order dated 9-1-2008 pertaining to NCL is an appealable order; that the assessees before him are located within his jurisdiction and are liable to levy of service tax within his jurisdiction. After recording this irrelevant observation, the adjudication authority proceeded to the analysis, whether the transaction in issue is "cargo handling service" or "transport of goods by road service". It is therefore clear that the adjudication order failed to consider whether the same transaction having already been classified as "transport of goods by road" and service tax on that basis collected from NCL, disables its jurisdiction to re-classify the same transaction as "cargo handling service", for collection of Service Tax over and again.

Respondent’s contention:- The Respondent stated, in this regards, place reliance on the case ofOrissa High Court inCoal Carriers v. CCE - 2011 (24) S.T.R. 395 (Orissa). After a detailed analysis of the relevant provisions, Orissa High Court declared that goods become cargo when loaded into a railway wagon/truck/tipper; that the distinction between goods and cargo is evident from the fact that transport of goods is liable to tax under the category "transport of goods by road services" that "cargo handling services" is defined in relation to cargo which clearly indicates that cargo handling services are distinct from "transport of goods by road". He also further explained that in view of_. the decision in Coal Carriers, the contention on behalf of the appellants that the service rendered by them truly and fairly constitutes "transportation of goods by road" cannot be countenanced. Services provided by the appellants clearly constitute "cargo handling service" and the conclusion by the adjudication authority (impugned in these appeals), that the services are "cargo handling services", is impeccable and calls for no interference.

Reasoning of Judgment:- After hearing both sides and considering the facts and circumstances, the CESTAT declare that the services provided by the appellants herein to Northern Coal Fields Ltd. under distinct work orders constitute "cargo handling services" as defined in Section 65(105)(zr) and do not constitute "transport of goods by road" service, as defined in Section 65(105(zzp) read with Section 65(50b). Since the impugned adjudication orders have failed to consider whether the proceedings against several appellants here are barred by limitation and no extended period of limitation could be invoked in lieu of the transactions having been noticed by the Revenue qua notices issued to NCL; and failed to analyse and consider the material on record i.e. that service tax was already assessed/recovered from NCL treating the service/transaction as "transport of goods by road", impugned adjudication orders are quashed and the matters remitted to the adjudication authority, to consider and determine whether the extended period of limitation [under the proviso to Section 73(1) of the Act] could be invoked in the circumstances and whether Service Tax liability could again be assessed and levied on the ground that the service provided by the appellants are "cargo handling services" when the same service and the value thereof was assessed as "transport of goods by road" and Service Tax thereon collected from NCL, as the service recipient. Appeals are allowed as indicated above. In the circumstances there shall however be no order as to costs.

Decision:- Appeal Allowed by way of remand.

Comment:- The issue of classification of the activity of transportation of coal including the loading of coal into trucks is a matter that is prone to litigation. However, in this case the assessee was provided the benefit to reconsider the issue of extended period of limitation as the appeal has been allowed by way of remand.

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PJ/Case law/2013-14/1907

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