ST - Composite services of transportation of materials where loading & unloading is ancillary are GTA Services - activities undertaken by contractor inside works non-taxable - recipient of GTA services has paid tax under Reverse Charge - stay granted: CESTAT
By TIOL News Service
KOLKATA, FEB 10, 2014: THE Applicant had received various works contracts from M/s. Usha Martin Ltd.(UM L) for unloading of ores at the Railway siding from the Railway rakes and shifting/transportation of the said materials from Tata Goods Shed(TGS)/Goods Dispatch Yard(GDY) at Tatanagar to the stacking yard in M/s. UML's works. The rate quoted is for the composite activity on per M.T. basis. In all these cases, necessary tools, tackles, labour, material handling equipment and vehicles were to be arranged by the Applicant and they are also liable to pay demurrage/wharfage charges on failing to unload/load goods within free time allowed by the Railway.
The SCN demanding Service Tax of Rs.2,16,17,110/- from the Applicant under the category of 'Cargo Handling Service' was confirmed by the CCE, Jamshedpur along with imposition of penalties on the Applicant, the Partner of the applicant and M/s Usha Martin Ltd.
Before the CESTAT, it is submitted that M/s.UML had paid Service Tax in this case on GTA Services under Reverse Charge Mechanism till May 16, 2008 and thereafter the tax was discharged by the Applicant under 'Cargo Handling Services' at the behest of the officers of the DGCEI and M/s.UML's direction. The applicant relied on the Board's Circular No.104/07/2008-ST dated 06.08.2008 clarifying that composite services consisting of various ancillary services, such as loading, unloading, packing/unpacking, trans-shipment, temporary warehousing etc. is a GTA Service. Inter alia, the decision in Modi Construction Co. - (2008-TIOL-1627-CESTAT-KOL) was also relied upon.
The Revenue representative reiterated the findings of the adjudicating authority.
The Bench examined the work orders and concluded that transportation is the principal activity and the loading and unloading are only ancillary to the activity of transportation. Adverting to the clarification dated 06.08.2008 issued by the Board and the case laws cited by the applicant, the Bench observed that service of shifting/transportation of raw materials, waste materials and finished products from one place to another inside plant does not call for taxation under the head Cargo Handling Services; and likewise the activity of transportation and stacking/handling within the stockyard premises of M/s.UML cannot be held to be covered by the activity of Cargo Handling Services.
The CESTAT further held -
"11. We find from the case laws mentioned (supra) that in case of composite services of shifting/transportation of materials where loading and unloading is ancillary to the main activity of transportation are held to be classifiable under GTA Services. Further the various activities undertaken by the contractor inside the works were held to be non-taxable. We also find that in this case M/s. Usha Martin Ltd. has already discharged the tax on GTA Services under the Reverse Charge Mechanism. In these circumstances we are prima facie of the view that all the Applicants have made out prima facie case for waiver of pre-deposit of entire amount of dues adjudged against each of them. Accordingly pre-deposit of dues adjudged against each of the Applicants is waived and its recovery stayed during pendency of the Appeals…."
The Stay Applications were allowed.
(See 2014-TIOL-206-CESTAT-KOL)
