2018 (7) TMI 1923 - AT - Service Tax

Classification of services - whether the activity of packing, unitization, strapping etc. undertaken by the appellant is chargeable to service tax under the heading cargo handling services under Section 65 (105) (zr) of the Finance Act, 1994? - HELD THAT - Similar issue decided in the case of SIGNODE INDIA LIMITED VERSUS COMMR. OF CEN. EXCISE CUSTOMS-II 2017 (3) TMI 934 - SUPREME COURT OF INDIA , where it was held that All activity undertaken by the appellant, though related to packing activity, is at a stage when the goods are yet to clear the factory gate as manufactured goods for onward transportation. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Substitution of Cause Title in Miscellaneous Application.
2. Taxability of activity of packing, unitization, strapping under cargo handling services or packaging services.
3. Applicability of judgment of Hon'ble Supreme Court in similar case.

Analysis:
1. The appellant filed a Miscellaneous Application seeking substitution of the Cause Title due to the transfer of business of industrial packaging to another company. The Business Transfer Agreement dated 30.11.2013 confirmed the transfer of business to Signode India Limited on a 'Going Concern Basis', resulting in a change of the Appellant Company's name to M/s Signode India Limited. The Application was allowed, and the appeal was taken up for final disposal with consent from both sides.

2. The appeal challenged the service tax demand confirmed by the Commissioner for the period from 16.8.2002 to 09.09.2004 on the activity of packing, unitization, packeting, and strapping of goods. The Commissioner held the activity taxable under 'Cargo Handling Services' and invoked the extended period of limitation. The appellant argued that the activity fell under 'packaging services' under Section 65(105)(zzzf) only from 16th May 2005, citing a judgment of the Hon'ble Supreme Court in a similar case favoring the appellant.

3. The Tribunal analyzed the issue of taxability under 'cargo handling services' or 'packaging services' in light of the Hon'ble Supreme Court judgment. The Supreme Court's decision clarified the distinction between cargo handling and packaging activities, emphasizing that the liability for pre-amendment period should not be imposed based on post-amendment provisions. The Court highlighted that the appellant's activity of packing goods within the factory unit did not involve transportation and, therefore, did not fall under cargo handling services before the 2005 amendment. The Circular issued by the Central Board of Excise and Customs further supported the understanding that activities like packing, unpacking, loading, and unloading by cargo handling agencies were taxable under cargo handling services, which did not apply to the appellant's case.

4. Consequently, the Tribunal, following the Hon'ble Supreme Court's judgment, set aside the Commissioner's order confirming the demand under cargo handling services. The appeal was allowed, providing consequential relief. The Tribunal's decision was based on the merit of the case, and the issue of limitation raised by the appellant was not addressed.