Rachna Gupta ORDER
C.L. Mahar, Member (T)
1. The appellants are engaged in providing taxable services under the category of "Goods Transport Agency Services" to M/s. Western Coal Field Ltd. during the period January 2009 to March 2011. Show Cause Notice dated 05.02.2010, for the period January 2009 to March, 2009, Show Cause Notice dated 27.09.2010 for the period April 2009 to March 2010 and Show Cause Notice dated 04.10.2011 for the period April, 2010 to March 2011 were issued on the ground that the appellants were doing loading, transport and unloading of coal from mining under the category of "Cargo Handling Services".
2. The basic issue before us for adjudication is that whether the department is correct in holding that the service provided by the above mentioned appellants falls under the category of cargo handling services as defined under section 65(105)(zr) read with section 105(23) of the Finance Act, 1994 or whether the service tax is correctly been paid by recipient of the service under Goods Transportation Agency service on reverse charge basis. In this regard, it will be appropriate to have a look at the sample contract with regard to above mentioned appellant
Contract No. WCL/Pench/CME(OPR)/116/09-10/699 dated 14.5.2010
Clause No. 28.
Escalation if applicable will be payable as per the tender document as the contract period is for 12 (Twelve) months as per clause No. 37.00 of Special Terms and Conditions of Tender document for price variation clause.
Contract No. WCL/Pench/CME (OPR)/89/2009-10 dated 23.3.2010
Clause No. 31.
The rates are based on ruling price of diesel as on 1.03.2010 i.e. Rs. 39.87 per litre. Escalation if applicable will be paid as per clause No. 37 of Special Terms and Conditions of Tender document for price variation clause.
3. It can be seen from the above mentioned terms of the contract that rates which have been provided to the appellant is based on the distance for which transportation of the coal is to be undertaken by the service provider i.e. the appellant in these cases. The relevant prices as mentioned above is also subject to escalation of the transportation rates as per changes in the fuel price for the relevant period. This basically signifies that the rates are predominantly for transportation of cargo rather than for handing of cargo. However, before proceeding further the relevant section 65A of Finance Act, 1994 need to be looked into in detail for classification of the service rendered by the appellant. The provisions of section 65A provides as follows:-
SECTION 65A. Classification of taxable services - (1) For the purposes of this Chapter, classification of taxable services shall be determined according to the terms of the sub-clause (105) of Section 65;
(2) When for any reason, a taxable service, is prima facie, classifiable under two or more sub-clauses of clause (105) of section 65, classification shall be effected as follows:
(a) the sub-clause which provides the most specific description shall be preferred to sub-clauses providing a more general description;
(b) composite service consisting of a combination of different services which cannot be classified in the manner specified in clause (a), shall be classified as if they consisted of a service which gives them their essential character, in so far as this criterion is applicable;
(c) when a service cannot be classified in the manner specified in clause (a) or clause (b), it shall be classified under the sub-clause which occurs first among the sub-clauses which equally merit consideration.]
4. It can be seen from a plain reading of 65A(2)(b) that the classification in the case of combined service is to be decided by analyzing the fact as to which service gives essential character to the service being performed. As can be seen from the above contract that the essential character of the service for which contract has been entered by the service provider is that the service received are for transportation of coal for mining area to the railway siding and the activity of loading/unloading mechanically or otherwise is in our view, is only incidental to the activity of transportation of the cargo in these cases.
5. In view of the above, we hold that the service provided by the appellants have rightly been classified in the Goods Transportation Agency service.
6. We also feel that this issue has already been examined by the Hon'ble Supreme Court in their decision in the case of CCE & ST Raipur Vs. Singh Transporters [MANU/SC/1177/2017 : (2017 (4) GSTL 3 (SC)] wherein the Hon'ble Supreme Court has held that activity undertaken by the assessee of transporting of coal from the pithead of the mines to railway siding is more appropriately classifiable under service head of Transport of Goods by road services. The relevant extract of the above judgment is reproduced herein below:
"6. Be that as it may, even if the relied upon judgment in the case of Arjuna Carriers (supra) is of no consequence to the present case, we are of the view that the activity undertaken by the respondent i.e. transportation of coal from the pit-heads to the railway sidings within the mining areas is more appropriately classifiable under Section 65(105)(zzp) of the Act, namely, under the head "transport of goods by road service" and does not involve any service in relation to "mining of mineral, oil or gas" as provided by Section 65(105)(zzzy) of the Act."
7. In view of above, we find no merit in the impugned order, the same is set-aside and the appeal is allowed with consequential relief, if any.
(order pronounced in the open Court on 30.10.2018)
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