2012 (9) TMI 941 - HC - Service Tax

Taxability - loading unloading and shifting of sugar bags from the floor of the mill house to the godown and from one godown to another godown - whether the service comes within the ambit of service tax under Cargo Handling Service or not? - Held that - In common parlance cargo means load which is to be carried by ship aeroplane rail or truck. The handling of transportation of goods by itself unless it is an organised activity which is connected with carrying cargo (load) by ship aeroplane rail or truck is involved would not fall within the definition of cargo handling service. The definition specifically excludes handling of export cargo or passenger baggage or mere transportation of goods In the present case the transportation of goods namely the sugar bags is within the factory. The respondent firm was engaged for loading unloading packing unpacking stacking re-stacking and shifting of bags from floor of mills from godowns and from one godown to another. The firm with its partners and other labourers handled bags of sugar under a contract within the factory premises. The sugar bags were not to be loaded or unloaded for any movement outside the factory on public roads on any ships airplane or trucks for onward movement to any destination. The activities will fall within the meaning of transportation of goods and would certainly not be included in the definition of Cargo Handling Service which is the service exigible to service tax. Appeal dismissed - decided against Revenue.

Summary

Issues:
Delay in filing the Central Excise Appeal under Section 35G of the Central Excise Act, 1944; Interpretation of the term 'Cargo Handling Service' under Section 65 (23) of the Finance Act, 1994.

Delay in Filing Appeal:
The Commissioner, Central Excise, Commissionerate, Meerut-I filed a Central Excise Appeal with a delay of two days against the judgment of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). The delay was explained and condoned by the court, allowing for arguments to be heard without interference on merits.

Interpretation of 'Cargo Handling Service':
The case involved a show cause notice served upon the appellant to recover service tax for loading, unloading, and shifting of sugar bags within a sugar mill. The Adjudicating Authority confirmed the demand, but the appeal was allowed by the Commissioner (Appeals) based on the argument that the appellant's activities did not fall under the definition of 'Cargo Handling Service' as per Section 65 (105) (ZR) of the Finance Act, 1994.

Legal Precedents and Interpretations:
The Appellate Authority referenced judgments from various High Courts and CESTAT cases to support the finding that activities like shifting coal or helping in mechanized loading did not constitute 'Cargo Handling Service.' The Tribunal also held that movement of goods within a factory did not amount to cargo handling, leading to the dismissal of the revenue's appeal.

Arguments and Definitions:
The appellant's counsel argued that the activities fell within the definition of 'Cargo Handling Service' as per Section 65 (23) of the Act, emphasizing the loading, unloading, packing, and unpacking of cargo. However, the court analyzed the term 'cargo' from legal dictionaries and common parlance, concluding that the activities performed within the factory did not meet the criteria for 'Cargo Handling Service' liable to service tax.

Judgment and Conclusion:
After considering the arguments and legal interpretations, the court found no grounds to interfere with the Tribunal's judgment. Consequently, the Central Excise Appeal was dismissed, upholding the decision that the appellant's activities did not constitute 'Cargo Handling Service' under the Finance Act, 1994, and were not subject to service tax.