2017 (3) TMI 656 - AT - Service Tax

Classification of services - work relates to unloading of four wheeler wagons of coal and trucks of steam and slack coal and stacking of same or to feed it directly to crusher hopper - whether cargo handling services or maintenance service? - Held that - the work order is mainly linked with the activity undertaken by the appellant in the factory and in relation to production process. Unloading of coal is only incidental operation in work, that cannot be only reason to categories the work order for taxing under cargo handling service - nature of work done by the appellant did not come in the category of cargo handling service for service tax purpose - demand under the category of cargo handling service set aside - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Delay in filing the appeal, service tax liability under "cargo handling services" and "management, maintenance or repair service," penalties under section 76, 77, and 78 of the Finance Act, 1994, interpretation of work order dated 29.10.2002, applicability of tax categories, demand quantification based on income tax form 16, exemption for small scale service providers.

Analysis:
The judgment addresses the delay in filing the appeal, where the Tribunal condones the delay after being satisfied with the reasons provided. The appeal challenges an order confirming service tax liability under "cargo handling services" and "management, maintenance or repair service." The lower authorities had imposed penalties under sections 76, 77, and 78 of the Finance Act, 1994. The appellant contended that the services provided were integral to the manufacturing process of the client and should not be taxed under cargo handling services but rather maintenance services.

The Tribunal analyzed the work order dated 29.10.2002, finding that the activities performed by the appellant were primarily related to the manufacturing process of the client. While coal unloading was part of the work, it was deemed incidental, leading to a conclusion that the services did not fall under cargo handling services. The Tribunal referenced previous decisions to support this interpretation, emphasizing the connection of the work to the production process.

Regarding the demand under management, maintenance, or repair services, the quantification was based on the service recipient's income tax form 16. The appellant denied providing separate services in this category and highlighted the meager consideration received. The Tribunal directed the original authority to reexamine these submissions for a fresh decision, considering possible exemption for small scale service providers.

In conclusion, the Tribunal set aside the demand under cargo handling services and instructed a reassessment of the service tax liability under management, maintenance, or repair services. The appeal was disposed of accordingly, with the cross objection filed by the Revenue also being addressed in the judgment.