CESTAT, KOLKATA BENCH

Sainik Mining & Allied Services Ltd.

v.

Commissioner of Central Excise, Customs & Service Tax

DR. CHITTARANJAN SATAPATHY, TECHNICAL MEMBER

AND D.N. PANDA, JUDICIAL MEMBER

ORDER NOS. A-1878 & 1879 (KOL.) OF 2007

ST APPEAL NOs. 25 & 29 OF 2006

NOVEMBER 2, 2007

CARGO HANDLING SERVICE

Section 65 of the Finance Act, 1994 - Cargo handling service - Whether cargo in commercial parlance has a definite connotation, which is carried as freight in a ship, plane, rail or truck - Held, yes - Whether activity of mere mechanical transfer of coal from coal face to tippers and, subsequent, transportation of coal within mining area, does not come under purview of cargo handling service - Held, yes [Para 8]

>> Facts

The assessees were working in the mining area as per an agreement entered into with the owner of coal fields. The work performed by the assessees involved transportation of coal inside the colliery area and mechanical transfer of coal to tippers at quarry face. The authorities below had held that the assessees had provided cargo handling services to the owner of coal fields and, hence, had demanded service tax on the gross amount received by the assessees along with penalties.

On appeal :

>> Held

The activity undertaken by the assessees for mechanical transfer of coal from the coal face to tippers and subsequent transportation of the coal within the mining area, did not come under the purview of cargo handling service. The dominant activities undertaken by the assessees under the contract-in-question were primarily the movement of coal within mining area and transfer of coal from the coal face to the tippers, if at all, included loading and unloading, which were merely incidental. Cargo in commercial parlance has a definite connotation, which is carried as freight in a ship, plane, rail or truck. The activities undertaken by the assessees in terms of the contracts on behalf of the owner of coal fields to move coal within mining area did not fall in the category of cargo handling service. Moreover, the activities undertaken were principally the transportation of coal within mining area and, hence, the gross amounts received for the same could not be taxed under the category of cargo handling service. The definition of cargo handling service under the Act, did not include the kind of activities undertaken by the assessees and, hence, the same were not chargeable to service tax. It was also found that there was no suppression or mis-statement by the assessees regarding the nature of activities undertaken by them and, hence, the imposition of penalty on them was not at all justified. Accordingly, the impugned orders were to be set aside and both the appeals were to be allowed. [Para 8]

>> Case referred to

ITW India Ltd. v. CCE&C [2007] 8 STT 483 (Kol. - CESTAT) (para 6).

Ms. Shivani Shah for the Appellant. J.K. Jha for the Respondent.

nn