In a recent ruling, the New Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) held that loading and unloading activities conducted in a mining area do not fall under the category of ‘cargo handling services.’
In this case, the appellant, M/s. Shree Mohangarh Sharmik Theka Sahkari Samiti Ltd. had challenged the order passed by the commissioner ( Appeals ) which had upheld a service tax demand of Rs. 12,19,348 under the category of “Cargo Handling Services.”
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It is to be noted that this demand was made by the department on the activities performed by the appellant, including the loading of limestone at the mines and at railway sidings.
The issue arose after an investigation revealed discrepancies in service tax payments for services rendered to M/s. Rajasthan State Mines and Minerals Limited (RSMML). A show-cause notice was issued, alleging a service tax liability of Rs. 18,05,003 for activities categorized as ‘cargo handling’ and ‘Security Agency Services.’ The Commissioner ( Appeals ) re- determined the demand and reduced it to Rs. 12.19 lakhs dropped the demand on ‘Security Service’.
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The counsel on behalf of the appellant contended that in the show cause notice , it was acknowledged that the service tax on the transportation services which includes unloading of limestone at railway sidings, was deposited by M/s.RSMML.
The assessee’s counsel humbly submitted that the appellant had a bona fide belief that it had no liability to pay service tax.
The CESTAT observed that the Supreme Court in the case of Chowgule and Co. Pvt. Ltd. vs. Union of India, held that process of extraction of ores from mines washing, screening, crushing in the crushing plant and stacking at the mining site all are covered under the Mines Act, 1952,and cannot be called as ‘Cargo Handling Service’.
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The bench accepted the contention raised by the counsel of assessee that the SCN was time- barred.
The CESTAT, comprising Dr. Rachna Gupta ( Judicial Member ) and Hemambika R. Priya ( Technical Member ) set aside the impugned order and allowed the appeal filed by the appellant.
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