By TIOL News Service

MUMBAI, JAN 09, 2018: THE Appellant provided the following services-

1. To maintain liaison between MSEB on the first part and coal companies and Railways and its officers on the second part.

2. To supervise quantity and monitor the loading, movement of coal from the collieries including the loading and dispatch of the coal at the collieries by Railway and the receipt of the same at the destination i.e. the power station of the board viz. Bhusawal and Paras and to follow-up the work of despatches of coal, movement of coal & to obtain necessary documents from coal companies and the respective railways i.e. Railway Receipts (RR) etc.

3. As per the work order the Noticee is responsible for despatches of coal as per MSEB requirement of the coal, with a view to achieve the sustain generation at the Thermal Power Units of MSEB Power Station.

4. In terms of work order the Noticee is responsible to ensure that there is maximum supply of coal of proper grade and size against the required quantity by railways from the allotted collieries to the MSEBs respective power stations.

5. As per the work order the Noticee is required to supervise and ensure that proper quantity of coal is loaded to the full carrying capacity of the wagons upto prescribed limit which can be safely unloaded at the destination.

6. The Noticee is also required to help third party agency appointed by MSEB for drawal of samples at loading point for the work of identification of rakes, and its coding etc.

7. The Noticee is also required to ensure and follow-up with the coal authorities at the collieries and ensure that adequate indents of the Railway Wagons are submitted by the Coal Authorities and a regular allotment from the Railways. In terms of the work order it is paramount duty of the Noticee to keep the MSEBs Power Stations and MSEB Coal Office informed about the movement, despatches, receipts at various Power Stations.

8. In terms of the work order the Noticee is required to deploy at least one supervisor at each loading station and at each power station and in exchange yard and thereby monitor the movement of coal rakes and also to keep the relevant record pertaining to the coal rakes.

9. The Noticee is required to keep MSEB duly informed on day to day basis about the route restrictions and allotment limitations imposed by the Railways. The Noticee is also required to obtain day to dayprogramme of movement, dispatch of the coal from the Railways & collieries on behalf of MSEB and furnish the said programme to the respective Power Station etc.

10. The Noticee is required to take necessary action to expedite the dispatch of coal by the Railways from the collieries and that the Noticee shall keep the officers of the MSEB informed about the daily despatches of the coal by the Railways from time to time.

11. In terms of the work order the Noticee is required to ensure that the wagons/rakes booked to the MSEBs Power Stations are not diverted by the Railway Authorities.

12. The Noticee is also required to ensure that the coal allotted to MSEBs Power Stations shall be load as per the declared grade, size without any stone, mud or excessive moisture. In case of loading of coal containing stones, soil, shells, overburden, mud, excessive surface moisture, the Noticee is required to immediately lodge a complaint on behalf of the Board with colliery authorities.

13. The Noticee is required to ensure in consultation with the Coal Companies that the crushing and screening arrangements at the collieries are always in working condition & in case of non working immediate complaint is to be lodged with Coal Authorities under intimation to respective Power Station of MSEB.

14. The Noticee is required to ensure that the Authorities of the Coal Company should obtain the clear Railway Receipt with all details from the Railway Authorities, after loading the coal, before dispatch of the wagons. Such clear RRs from Coal Companies are to be collected by the Noticee and submitted to the concern stores of respective Power Stations of MSEB in minimum possible time.

The lower authorities held that the aforementioned services are taxable as "Clearing and Forwarding Agent".

The appellant is before the CESTAT and contends that the authorities had failed to appreciate the scope of the taxing entry inasmuch asliaisoning, supervising, loading is not an activity of clearing and forwarding; that Revenue had not at all shown which activity was in relation to clearing and forwarding for taxability; that only when the two activities i.e. clearing and forwarding are carried out cumulatively and simultaneously, that only is taxable. Reliance is placed on the decision in Coal Handlers Pvt. Ltd. - 2015-TIOL-101-SC-ST in support to emphasise that the apex court had specifically held that liaisoning would not be covered by the definition of clearing and forwarding service.

The AR supported the order of the lower authority.

The CESTAT observed -

“7. It is inconceivable how an activity not being covered by the fold of law shall be taxable beyond its mandate. It is well settled law in Cape Brandy Syndicate vs. Inland Revenue Commissioner (1921) 1 KB 64, which is also approved by Apex Court that taxing provision should be considered strictly without leaving any intendment. When law prescribed certain activity shall only be taxable on occurrence of taxable event, without any evidence to that effect, there is no presumption in taxation. In absence of such evidence on record, it is not at all possible to hold beyond the ratio laid down by the Apex Court which is binding on Tribunal on the given facts and circumstances and akin to the facts in the judgment of the Apex Court."

The appeal was allowed with consequential relief.

(See 2018-TIOL-121-CESTAT-MUM)