IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
CIRCUIT BENCH AT HYDERABAD
Date of Hearing 01.01.2014
For Approval &Signature :
Hon ble Mr. Justice G. Raghuram, President
Hon ble Mr. P.R. Chandrasekharan, Member (Technical)
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2.
Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
Yes
3.
Whether Lordships wish to see the fair copy of the order?
Seen
4.
Whether order is to be circulated to the Department Authorities?
Yes
Application No.ST/COD/25501/2013
Application No.ST/STAY/25502/2013
Appeal No.ST/25405/2013-CU[DB]
[Arising out of Order-in-Original No.VIZ-STX-001-COM-086-12, dated 27.06.2012, passed by the C.C.E. & S.T., Visakhapatnam-I]
M/s. Srinivasa Transports Appellant
Vs.
C.C.E. & S.T., Visakhapatnam-I Respondent
Appearance
Shri M.S. Nagaraja, Advocate - for the appellant
Shri N. Jagdish, Supdt (AR) - for the respondent
CORAM: Hon ble Mr. Justice G. Raghuram, President
Hon ble Mr. P.R. Chandrasekharan, Member (Technical)
Final Order No._____________, dated 01.01.2014
Application No.ST/COD/25501/2013
Per Justice G. Raghuram :
Condonation of delay of 103 days is sought on the ground that the employee of the appellant who is looking after the service tax matters, namely Shri Somaraju was severely indisposed on account of ortho-neurology problems. Medical certificate is produced in support of ill-health of Shri Somaraju. As satisfactory cause is shown, we condone the delay in filing the appeal.
Appeal No.ST/25405/2013-CU[DB]
Per Hon ble Mr. P.R. Chandrasekharan:
2. Vide Order-in-Original No.VIZ-STX-001-COM-086-12, dated 27.06.2012, Commissioner of Central Excise & Service Tax, Visakhapatnam-I Commissionerate confirmed service tax demands of Rs.1,05,22,657/- under the category of Cargo Handling service and an amount of Rs.63,43,575/- under the category of Support Service of Business or Commerce service along with interest and equivalent penalties under the provisions of Finance Act, 1994 against the appellant, M/s. Srinivasa Transport, Visakhapatnam. Aggrieved of the same, the appellant is before us.
3. Ld. Counsel for the appellant submits that as regards Business Support Service (BSS), the appellant provided internal transportation of containers with Tractor-Trailers inside the Visakhapatnam container terminal to M/s. Visakhapatnam Container Terminal Pvt. Ltd. (VCTPL). As per the contract entered into with M/s. VCTPL, the appellant was required to provide Tractor-Trailers of specific designs to M/s. VCTPL for various operations inside the terminal at all times and M/s. VCTPL agreed to pay Rs.200 for a 20 ft. Container and Rs.255 for a 40 ft. Container. This provision of Tractor-Trailers to M/s. VCTPL, by no stretch of imagination, can be classified under the category of Support Service of Business or Commerce as defined in Section 65 (104c) of the Finance Act, 1994. Therefore, the impugned demand is unsustainable in law.
4. As regards the service tax demand of Rs.1,05,26,657/-, it is the contention that the demand pertained to services rendered to M/s. Rashtriya Ispat Nigam Ltd. (RINL) during 2005-06 to 2009-10. The scope of the work entrusted consisted of handling and internal transportation of stores materials such as plant, machinery, equipment, etc. and all types of pipes, refractories, lubricants, spares, etc. at the plant site of Visakhapatnam steel plant and to undertake job contracts for miscellaneous works awarded from time to time such as supply of LCVs, packing materials for transportation, etc. Primarily, the services undertaken by the appellant was transportation of various goods from one place to another within the plant site. The services of unloading, stocking, packing, re-packing, etc., If any, undertaken was incidental or ancillary to the main service of transportation and therefore, it is the contention that the said services provided by the appellant to M/s. RINL would not come within the purview of cargo handling service. Reliance is placed on the decision of the Tribunal in the case of Modi Construction Co. Vs. C.C.E., Ranchi [2008 (12) S.T.R. 34 (Tri. Kolkata)], wherein it was held that shifting/transportation of raw-materials, waste materials and finished products from one place to another inside a plant would not come under the category of Cargo Handling Service . The said decision of the Tribunal was also affirmed by the Hon ble High Court of Jharkhand in C.C.E., Ranchi Vs. Modi [2011 (23) STR 6 (Jhar.)]. Therefore, the impugned demands are not sustainable and accordingly the ld. Counsel pleads for grant of stay.
5. The ld. Departmental Representative appearing for the Revenue, on the other hand, reiterates the findings of the adjudicating authority. He further submits that in the case of Coal Carriers Vs. C.C.E., Bhubaneshwar [2011 (24) S.T.R. 395], the Hon ble High Court of Orissa had held the view that loading of coal into railway wagons would come under the category of Cargo Handling Service and the ratio of the said decision would apply to the present case since as per the contracts awarded to the appellant by M/s. RINL, the same also includes handling of materials including loading, unloading, packing, re-packing, stocking, etc. The primary nature of service rendered is cargo handling and transportation is only incidental to cargo handling. As per the definition of cargo handling, if transportation is rendered as part of cargo handling service, the whole activity would be covered under cargo handling. Only if transportation alone is undertaken, the service would fall outside the purview of cargo handling. In the present case, the appellant is undertaking both the cargo handling and transportation and therefore, the demand is sustainable. As regards the demand under Business Support Service, it is contended that the appellant provided services, which were in support of the business undertaken by M/s. VCTPL, who was running a container terminal. Since providing of Tractor-Trailers was in support of the service rendered by M/s. VCTPL, the same would be assessable under Business Support Service . Accordingly, the ld. DR submits that the appellant would be liable to discharge service tax liability under the category of Business Support Service. Accordingly, he prays for upholding the impugned order and putting the appellant to terms in the interim.
6. We have carefully considered the submissions made by both the parties. After considering the submissions made, we observe that the issue for consideration in this case lies in a narrow compass and therefore, the appeal itself can be decided at this stage. Hence, after dispensing with the requirement of pre-deposit and with the consent of both the sides, we take up the appeal itself for consideration and disposal.
7. As regards the demand of service tax under the category of Business Support Service, Section 65 (104c) of the Act defines the said service as follows:-
Support service of business or commerce means services provided in relation to business or commerce and includes evaluation of prospective customers, telemarketing, processing of purchase orders and fulfilment services, information and tracking of delivery schedules, managing distribution and logistics, customer relationship management services, accounting and processing of transactions, operational assistance for marketing, formulation of customer service and pricing policies, infrastructural support services and other transaction processing .
As per the Explanation appended infrastructural support service includes providing office along with office utilities, lounge, reception with competent personnel to handle messages, secretarial services, internet and telecom facilities, pantry and security .
7.1 We have pursued the contract awarded to the appellant by M/s. VCTPL and the same is for providing professional services for containers with Tractor-Trailers at Visakha Container Terminal, Visakhapatnam. As per the terms of the contract, the duties and responsibilities include the provision of trained drivers and other employees with necessary heavy duty vehicle licence, tools, instruments and equipments, etc. as required for undertaking the work contemplated in the contract. The contractor is responsible for payment of wages, salaries, etc. to the employees engaged by him and is also required to fulfil the requirements of labour laws, etc. The appellant is also required to provide prescribed number of Tractor-Trailers for undertaking the transportation of containers within the terminal of specific dimensions. For the work rendered, the appellant is compensated @ of Rs.200/- for 20 ft. Container and Rs.255/- for 40 ft. Container. Thus, the services rendered by the appellant appears classifiable under the category of Supply of Tangible Goods for Use (STGU) service as defined in Section 65 (105) (zzzzj) of the Act, which defines the service as supply of tangible goods including machinery, equipments and appliances for use, without transferring right of possession and effective control of such machinery, equipment and appliances . In the present case, the appellant has supplied tractor-trailers along with trained drivers to undertake transportation of containers within the terminal. By no stretch of imagination, the service rendered by the appellant to M/s. VTCPL falls under the category of Business Support Service as defined in Section 65 (104c) of the Act The services rendered by the appellant do not fit into the category of the various services mentioned therein. Therefore, we are of the considered view that the services rendered by the appellant to M/s. VTCPL do not come within the purview of Business Support Service and therefore, confirmation of service tax demand under the said category, for an amount of Rs.63,43,575/- for the period May, 2006 to June, 2010 is clearly unsustainable in law. Accordingly, we set aside the service tax demand under this category confirmed against the appellant.
7. As regards the demand of Rs.1.05 crore (approx) under the category of cargo handling services, the contract entered into by the appellant with M/s. RINL is for handling and internal transportation of stores materials within the Visakhapatnam Steel Plant site. The scope of the work included handling and internal transportation of stores materials such as plant, machinery, equipments, etc. at the plant site including crushing of coke breeze meant for Visakhapatnam Steel Plant, job contract for miscellaneous works awarded from time to time, supply of LCVs and packing of materials for transportation. Thus, a number of services are required to be provided by the appellant. While handling of stores materials along with internal transportation might merit classification under cargo handling service in the light of the decision of Hon ble High Court Orissa in the case of Coal Carriers supra, other activities such as crushing of coke breeze, job contracts for miscellaneous works awarded from time to time, etc. would not come under the purview of cargo handling service. Similarly, supply of LCVs would also not come within the purview of cargo handling service. We have also pursued some of the invoices raised by the appellant on the service recipient which describes the activities as transportation and the payment is made to the appellant based on the quality of goods transported. Similarly, the appellant has provided labour for undertaking miscellaneous jobs and payment has been made to the appellant based on number of man-days involved. This service also would not come under the category of cargo handling service. Therefore, clubbing all the activities undertaken by the appellant under Cargo Handling Service and levying service tax under the said category cannot be sustained in law. The adjudicating authority has to examine the individual activities carried out by the appellant and then classify the same, considering the definitions provided in the law, which has not been done in the present case. Therefore, the matter has to go back to the adjudicating authority for fresh consideration. Accordingly, we set aside the impugned order and remand the case back to the adjudicating authority for fresh consideration whether all the activities undertaken by the appellant for M/s. RINL would come within the purview of Cargo Handling Service or only a part of the activity would be covered within the definition of Cargo Handling Service . The appellant is also directed to produce documentary evidences in support of their claim some of the activities undertaken by them would not come under the purview of Cargo Handling Service .
8. In sum, we set aside the demand of service tax under the category of Business Support Service and remand the case back to the adjudicating authority for de novo consideration in respect of the services tax demand under the category of Cargo Handling Service. Thus, the appeal is partly allowed and partly remanded. The stay application also stands disposed of.
(Justice G. Raghuram)
President
(P.R. Chandrasekharan)
Member (Technical)
SSK
-11-
APPELLATE TRIBUNAL
CIRCUIT BENCH AT HYDERABAD
Date of Hearing 01.01.2014
For Approval &Signature :
Hon ble Mr. Justice G. Raghuram, President
Hon ble Mr. P.R. Chandrasekharan, Member (Technical)
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2.
Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
Yes
3.
Whether Lordships wish to see the fair copy of the order?
Seen
4.
Whether order is to be circulated to the Department Authorities?
Yes
Application No.ST/COD/25501/2013
Application No.ST/STAY/25502/2013
Appeal No.ST/25405/2013-CU[DB]
[Arising out of Order-in-Original No.VIZ-STX-001-COM-086-12, dated 27.06.2012, passed by the C.C.E. & S.T., Visakhapatnam-I]
M/s. Srinivasa Transports Appellant
Vs.
C.C.E. & S.T., Visakhapatnam-I Respondent
Appearance
Shri M.S. Nagaraja, Advocate - for the appellant
Shri N. Jagdish, Supdt (AR) - for the respondent
CORAM: Hon ble Mr. Justice G. Raghuram, President
Hon ble Mr. P.R. Chandrasekharan, Member (Technical)
Final Order No._____________, dated 01.01.2014
Application No.ST/COD/25501/2013
Per Justice G. Raghuram :
Condonation of delay of 103 days is sought on the ground that the employee of the appellant who is looking after the service tax matters, namely Shri Somaraju was severely indisposed on account of ortho-neurology problems. Medical certificate is produced in support of ill-health of Shri Somaraju. As satisfactory cause is shown, we condone the delay in filing the appeal.
Appeal No.ST/25405/2013-CU[DB]
Per Hon ble Mr. P.R. Chandrasekharan:
2. Vide Order-in-Original No.VIZ-STX-001-COM-086-12, dated 27.06.2012, Commissioner of Central Excise & Service Tax, Visakhapatnam-I Commissionerate confirmed service tax demands of Rs.1,05,22,657/- under the category of Cargo Handling service and an amount of Rs.63,43,575/- under the category of Support Service of Business or Commerce service along with interest and equivalent penalties under the provisions of Finance Act, 1994 against the appellant, M/s. Srinivasa Transport, Visakhapatnam. Aggrieved of the same, the appellant is before us.
3. Ld. Counsel for the appellant submits that as regards Business Support Service (BSS), the appellant provided internal transportation of containers with Tractor-Trailers inside the Visakhapatnam container terminal to M/s. Visakhapatnam Container Terminal Pvt. Ltd. (VCTPL). As per the contract entered into with M/s. VCTPL, the appellant was required to provide Tractor-Trailers of specific designs to M/s. VCTPL for various operations inside the terminal at all times and M/s. VCTPL agreed to pay Rs.200 for a 20 ft. Container and Rs.255 for a 40 ft. Container. This provision of Tractor-Trailers to M/s. VCTPL, by no stretch of imagination, can be classified under the category of Support Service of Business or Commerce as defined in Section 65 (104c) of the Finance Act, 1994. Therefore, the impugned demand is unsustainable in law.
4. As regards the service tax demand of Rs.1,05,26,657/-, it is the contention that the demand pertained to services rendered to M/s. Rashtriya Ispat Nigam Ltd. (RINL) during 2005-06 to 2009-10. The scope of the work entrusted consisted of handling and internal transportation of stores materials such as plant, machinery, equipment, etc. and all types of pipes, refractories, lubricants, spares, etc. at the plant site of Visakhapatnam steel plant and to undertake job contracts for miscellaneous works awarded from time to time such as supply of LCVs, packing materials for transportation, etc. Primarily, the services undertaken by the appellant was transportation of various goods from one place to another within the plant site. The services of unloading, stocking, packing, re-packing, etc., If any, undertaken was incidental or ancillary to the main service of transportation and therefore, it is the contention that the said services provided by the appellant to M/s. RINL would not come within the purview of cargo handling service. Reliance is placed on the decision of the Tribunal in the case of Modi Construction Co. Vs. C.C.E., Ranchi [2008 (12) S.T.R. 34 (Tri. Kolkata)], wherein it was held that shifting/transportation of raw-materials, waste materials and finished products from one place to another inside a plant would not come under the category of Cargo Handling Service . The said decision of the Tribunal was also affirmed by the Hon ble High Court of Jharkhand in C.C.E., Ranchi Vs. Modi [2011 (23) STR 6 (Jhar.)]. Therefore, the impugned demands are not sustainable and accordingly the ld. Counsel pleads for grant of stay.
5. The ld. Departmental Representative appearing for the Revenue, on the other hand, reiterates the findings of the adjudicating authority. He further submits that in the case of Coal Carriers Vs. C.C.E., Bhubaneshwar [2011 (24) S.T.R. 395], the Hon ble High Court of Orissa had held the view that loading of coal into railway wagons would come under the category of Cargo Handling Service and the ratio of the said decision would apply to the present case since as per the contracts awarded to the appellant by M/s. RINL, the same also includes handling of materials including loading, unloading, packing, re-packing, stocking, etc. The primary nature of service rendered is cargo handling and transportation is only incidental to cargo handling. As per the definition of cargo handling, if transportation is rendered as part of cargo handling service, the whole activity would be covered under cargo handling. Only if transportation alone is undertaken, the service would fall outside the purview of cargo handling. In the present case, the appellant is undertaking both the cargo handling and transportation and therefore, the demand is sustainable. As regards the demand under Business Support Service, it is contended that the appellant provided services, which were in support of the business undertaken by M/s. VCTPL, who was running a container terminal. Since providing of Tractor-Trailers was in support of the service rendered by M/s. VCTPL, the same would be assessable under Business Support Service . Accordingly, the ld. DR submits that the appellant would be liable to discharge service tax liability under the category of Business Support Service. Accordingly, he prays for upholding the impugned order and putting the appellant to terms in the interim.
6. We have carefully considered the submissions made by both the parties. After considering the submissions made, we observe that the issue for consideration in this case lies in a narrow compass and therefore, the appeal itself can be decided at this stage. Hence, after dispensing with the requirement of pre-deposit and with the consent of both the sides, we take up the appeal itself for consideration and disposal.
7. As regards the demand of service tax under the category of Business Support Service, Section 65 (104c) of the Act defines the said service as follows:-
Support service of business or commerce means services provided in relation to business or commerce and includes evaluation of prospective customers, telemarketing, processing of purchase orders and fulfilment services, information and tracking of delivery schedules, managing distribution and logistics, customer relationship management services, accounting and processing of transactions, operational assistance for marketing, formulation of customer service and pricing policies, infrastructural support services and other transaction processing .
As per the Explanation appended infrastructural support service includes providing office along with office utilities, lounge, reception with competent personnel to handle messages, secretarial services, internet and telecom facilities, pantry and security .
7.1 We have pursued the contract awarded to the appellant by M/s. VCTPL and the same is for providing professional services for containers with Tractor-Trailers at Visakha Container Terminal, Visakhapatnam. As per the terms of the contract, the duties and responsibilities include the provision of trained drivers and other employees with necessary heavy duty vehicle licence, tools, instruments and equipments, etc. as required for undertaking the work contemplated in the contract. The contractor is responsible for payment of wages, salaries, etc. to the employees engaged by him and is also required to fulfil the requirements of labour laws, etc. The appellant is also required to provide prescribed number of Tractor-Trailers for undertaking the transportation of containers within the terminal of specific dimensions. For the work rendered, the appellant is compensated @ of Rs.200/- for 20 ft. Container and Rs.255/- for 40 ft. Container. Thus, the services rendered by the appellant appears classifiable under the category of Supply of Tangible Goods for Use (STGU) service as defined in Section 65 (105) (zzzzj) of the Act, which defines the service as supply of tangible goods including machinery, equipments and appliances for use, without transferring right of possession and effective control of such machinery, equipment and appliances . In the present case, the appellant has supplied tractor-trailers along with trained drivers to undertake transportation of containers within the terminal. By no stretch of imagination, the service rendered by the appellant to M/s. VTCPL falls under the category of Business Support Service as defined in Section 65 (104c) of the Act The services rendered by the appellant do not fit into the category of the various services mentioned therein. Therefore, we are of the considered view that the services rendered by the appellant to M/s. VTCPL do not come within the purview of Business Support Service and therefore, confirmation of service tax demand under the said category, for an amount of Rs.63,43,575/- for the period May, 2006 to June, 2010 is clearly unsustainable in law. Accordingly, we set aside the service tax demand under this category confirmed against the appellant.
7. As regards the demand of Rs.1.05 crore (approx) under the category of cargo handling services, the contract entered into by the appellant with M/s. RINL is for handling and internal transportation of stores materials within the Visakhapatnam Steel Plant site. The scope of the work included handling and internal transportation of stores materials such as plant, machinery, equipments, etc. at the plant site including crushing of coke breeze meant for Visakhapatnam Steel Plant, job contract for miscellaneous works awarded from time to time, supply of LCVs and packing of materials for transportation. Thus, a number of services are required to be provided by the appellant. While handling of stores materials along with internal transportation might merit classification under cargo handling service in the light of the decision of Hon ble High Court Orissa in the case of Coal Carriers supra, other activities such as crushing of coke breeze, job contracts for miscellaneous works awarded from time to time, etc. would not come under the purview of cargo handling service. Similarly, supply of LCVs would also not come within the purview of cargo handling service. We have also pursued some of the invoices raised by the appellant on the service recipient which describes the activities as transportation and the payment is made to the appellant based on the quality of goods transported. Similarly, the appellant has provided labour for undertaking miscellaneous jobs and payment has been made to the appellant based on number of man-days involved. This service also would not come under the category of cargo handling service. Therefore, clubbing all the activities undertaken by the appellant under Cargo Handling Service and levying service tax under the said category cannot be sustained in law. The adjudicating authority has to examine the individual activities carried out by the appellant and then classify the same, considering the definitions provided in the law, which has not been done in the present case. Therefore, the matter has to go back to the adjudicating authority for fresh consideration. Accordingly, we set aside the impugned order and remand the case back to the adjudicating authority for fresh consideration whether all the activities undertaken by the appellant for M/s. RINL would come within the purview of Cargo Handling Service or only a part of the activity would be covered within the definition of Cargo Handling Service . The appellant is also directed to produce documentary evidences in support of their claim some of the activities undertaken by them would not come under the purview of Cargo Handling Service .
8. In sum, we set aside the demand of service tax under the category of Business Support Service and remand the case back to the adjudicating authority for de novo consideration in respect of the services tax demand under the category of Cargo Handling Service. Thus, the appeal is partly allowed and partly remanded. The stay application also stands disposed of.
(Justice G. Raghuram)
President
(P.R. Chandrasekharan)
Member (Technical)
SSK
-11-
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