2016 (12) TMI 797 - AT - Service Tax

Classification of services - providing of labour - whether the service would fall under the head cargo handling services or manpower supply agency service? - Held that - Department has not given any additional facts to hold that services rendered by the respondent are under the category of cargo handling services and not under the category of man power recruitment agency service. The CESTAT Delhi s decision in the case of J J Enterprises 2005 (3) TMI 14 - CESTAT, NEW DELHI also supports the stand of the respondent, where it was held that Cargo handing cannot take place in the absence of packing machine and conveyer - besides the Commissioner (A) also found that The appellant has taken registration on 18.08.2005 under the category of Man power supply agency s services. Since then the appellant is discharging service tax liability under the said service and filing ST-3 returns. The demand is to the effect that for the period 01.08.2004 to 15.06.2005 i.e. prior to 16.06.2005 the appellant were covered under the category of Cargo Handling Services for which neither any registration was taken nor service tax was discharged. The appellant have come up with a plea that the activities undertaken by them having remained the same i.e. during the period 01.08.2004 to 15.06.2005 and from 16.06.2005 till date, no reasons have been given for the change of classification of services before and from 16.06.2005. At present the appellants services are being accepted as Man power supply agency s services an taxes are being collected under this head. As on date the Cargo handling services are still in existence. No efforts have been made to change the present classification to cargo handling services . Neither the investigators nor the adjudicating authority have given the reasons as to why the impugned services were classifiable under cargo handling before 16.6.2005 and under man power recruitment from 16.06.2005. We are in agreement with the findings of the Commissioner (A). Consequently, the Revenue s appeal is without merits and is hereby rejected - decided against Revenue.

Summary

Issues:
1. Classification of services under cargo handling services or manpower supply agency service for service tax liability.

Analysis:
The appellate tribunal was presented with an appeal by the Revenue against an order dropping a demand for service tax amounting to ?4,56,815 based on the classification of services rendered by the appellant. The Revenue contended that the services fell under the category of cargo handling services and thus, the service tax demand should be sustained. On the other hand, the appellant argued that they were providing labor services and paying service tax under the classification of manpower supply agency service, citing a relevant case law to support their position.

The tribunal carefully considered the submissions and the case law presented by both parties. It highlighted the findings of the Commissioner (A) in the impugned order, where it was noted that the appellant had registered under the category of manpower supply agency services since a specific date and had been discharging service tax liability accordingly. The Commissioner (A) observed that the appellant's services were being accepted as manpower supply agency services, and no reasons were provided for changing the classification of services before and after a certain date. The tribunal also referenced a relevant case law to support the appellant's position that once a particular classification is accepted and service tax is collected accordingly, it cannot be changed retroactively without sufficient justification.

Moreover, the tribunal noted that the Department failed to provide any additional facts to support the classification of the services under cargo handling services. It was emphasized that the decision in the case of J J Enterprises supported the respondent's position. Ultimately, the tribunal agreed with the findings of the Commissioner (A) and concluded that the Revenue's appeal lacked merit. As a result, the appeal was rejected, and the impugned demand for service tax was deemed unsustainable based on the classification of services as manpower supply agency services rather than cargo handling services.