2015 (1) TMI 1139 - AT - Service Tax

Cargo handling service - activity of stacking the bags on the railway wagons or trucks - Assessee contended that it did not provide cargo handling service since the urea manufactured by NFL was merely being collected in bags from bagging plants and these bags were stacked on the conveyor. - demand beyond the scope of SCN - Held that - On analysis of the transactional documents including contract and the work orders, ld. appellate Commissioner also concluded that cleaning of the conveyor systems for transport of the fertilizer bags does not fall within the ambit of cleaning activity. Appellate Commissioner further held that assessee s activity fall outside the ambit of manpower recruitment or supply agency since under the agreement with NFL persons employed by the assessee are its own employees and not of NFL therefore, there was no manpower recruitment or supply agency service provided to NFL by the assessee. - Neither in the show cause notice, the adjudication order nor the appellate order is there any indication which aspects of the activities of the assessee, under the same transactional documents, fall clearly within which of the three taxable services alleged. There are also no particulars provided as to what part of the consideration received by the assessee is attributable to each of the three taxable services allegedly performed/rendered by the assessee. - Decided against Revenue.

Summary

Issues:
1. Alleged provision of three taxable services without proper registration and filing of returns.
2. Dispute regarding the classification of services provided under the three categories.
3. Contention regarding the nature of activities falling under each taxable service.
4. Rejection of claims by the Additional Commissioner and subsequent appeal by the assessee.
5. Analysis of transactional documents to determine the nature of services provided.
6. Lack of clarity in the show cause notice and adjudication order regarding the taxable services.

Analysis:
1. The case involved a show cause notice alleging that the respondent provided three taxable services without proper compliance with registration and filing of returns under the Finance Act, 1994. The services in question were Coal Handling and Loading, Manpower Recruitment or Supply Agency, and Cleaning service.

2. The respondent contended that the Service Tax demand was made without specifying under which category the services fell and without indicating the taxable value for each service. The dispute arose regarding the classification of services, particularly concerning cargo handling, manpower recruitment, and cleaning activities.

3. Regarding cargo handling, the respondent argued that their employees were merely stacking bags on railway wagons or trucks, which did not constitute cargo handling service. For manpower recruitment, the respondent stated that the activities performed, such as fixing bags and overseeing conveyor systems, did not fall under the scope of the service.

4. The Additional Commissioner rejected the claims of the assessee and confirmed the Service Tax demand. However, the assessee appealed, and the Commissioner (Appeals) allowed the appeal based on the analysis of the activities performed by the assessee, including packing and unpacking of fertilizer bags using mechanized systems.

5. The appellate Commissioner found that the cleaning activities undertaken by the assessee did not qualify as cleaning service under the scope of the taxable service. Additionally, it was determined that the manpower recruitment service was not applicable as the employees were not recruited or supplied to the client but were the assessee's own employees.

6. The lack of clarity in the show cause notice, adjudication order, and appellate order regarding the classification of services and consideration received by the assessee for each taxable service led to the dismissal of the appeal. The appellate Tribunal agreed with the conclusions of the appellate Commissioner and highlighted the necessity of applying proper classification discipline as per the Act.