2016 (10) TMI 681 - AT - Service Tax

Classification of service - works contract for bagging of urea and loading the same in wagons and trucks in the bagging plant - man power supply services w.e.f. 16.06.2005 or cargo handling services w.e.f. 16.08.2002 - Extended period of limitation - Held that - board s clarification issued vide F. No. 8-11/1/2002-TRU dated 01.08.2002 clarifying that if someone hires labour / labourers for loading and unloading of goods in their individual capacity, such activities will not come under the purview of service tax as a cargo handling services. The issue gets covered in the decision of the case of Renu Singh & Co. vs. CCE Hyderabad 2007 (3) TMI 63 - CESTAT,BANGALORE where it was held that the identical services will not get covered under the cargo handling services. The respondent got themselves registered with the service tax department w.e.f. 16.06.2005 under the category of man power supply agency and were discharging their duty liability accordingly. As such the assessee s activity were fully in the knowledge of the Revenue, in which case delayed issuance of the show cause notice in the year 2007 is not justified at all. No suppression or malafide with an intent to evade payment of duty can be attributed to the assessee. Appeal rejected - decided against Revenue.

Summary

Issues:
Interpretation of service tax liability for cargo handling services vs. man power supply services. Delayed issuance of show cause notice and its impact on the case.

Analysis:
The case involves a dispute regarding the categorization of services provided by the assessee as either cargo handling services or man power supply services for the purpose of service tax liability. The Revenue contended that the services fell under cargo handling services, becoming taxable from 16.08.2002. However, the Commissioner (A) allowed the assessee's appeal based on the Tribunal's precedent decision, which stated that certain activities did not amount to cargo handling services but rather packing services or man power supply services, taxable from 16.06.2005. The Tribunal noted that the contract between the parties and a board's clarification supported the assessee's position. The Tribunal also referenced previous decisions where similar services were not considered cargo handling services, further strengthening the assessee's case.

Regarding the delayed issuance of the show cause notice in 2007, the Tribunal found that the assessee had been registered under the man power supply agency category since 16.06.2005 and had been compliant with their tax obligations. The Tribunal held that the delayed notice was unjustified, as there was no evidence of suppression or intent to evade duty on the part of the assessee. The Tribunal concluded that the case was not only strong on merits but also had a valid argument based on the limitation aspect due to the delayed notice issuance.

Ultimately, the Tribunal upheld the Commissioner (A)'s decision, rejecting the Revenue's appeal. The Tribunal found no grounds to deviate from the precedent decisions and the Commissioner (A)'s ruling. The judgment highlighted the importance of considering both the merits of the case and procedural aspects like timely issuance of notices in tax matters.