Coal Transportation with Incidental Loading Not Cargo Handling Service: Delhi CESTAT

Singh Construction & Co. Vs Commissioner of Customs (CESTAT Delhi)

Summary: The appeal concerned the classification of services provided by Singh Construction & Co. to M/s. Northern Coalfields Ltd. The appellant was engaged in transporting coal through tipping trucks within the mining area, with loading of coal into the trucks being carried out by pay loaders. The Department treated the activity as ‘Cargo Handling Services’ under Section 65(23) of the Finance Act, 1994 and confirmed a service tax demand of ₹3,32,59,302 for the period October 2013 to March 2015, along with interest and penalties.

The appellant contended that its principal activity was transportation of coal and that loading and unloading were merely incidental to such transportation. It was argued that the activity did not constitute ‘Cargo Handling Services’, particularly in view of departmental circulars and judicial decisions concerning composite transportation services. The Tribunal examined the statutory definitions and the nature of the activity and found that transportation was the dominant service.

CESTAT Delhi relied upon the principles emerging from Sushil & Company, Singh Transporters and N.C. Paul & Company, observing that incidental loading and unloading would not alter the essential character of a service principally involving transportation of coal. The Tribunal therefore upheld the distinction between transportation of goods and an independent Cargo Handling Service.