2018 (6) TMI 1434 - AT - Service Tax

Non/short payment of service tax - demand of service tax alongwith interest and penalty - Goods Transport Service (GTA) - Cleaning Service - Manpower Supply Service - Cargo Handling Service - Packing Service - Construction of Complex Service - Commercial and Industrial Construction Service, Maintenance and Repair Service of Immovable property. GTA Service - Held that - It clarifies that a person to render goods transport service should be an agency meant exclusively for providing goods transport service by whatever means and for the purpose, he should be issuing a consignment note. None of the criteria is met by the appellant in the present case - the order under challenge qua confirming GTA Service Tax liability is not sustainable. Cleaning Services - Held that - The authorities below have already reduced the demand for cleaning. At this stage, the demand is only confined to cleaning of SELO MCL i.e cleaning of loose cement either through air slide or by transportation by means to gentry and lump etc. The same is very much included in the definition of cleaning activity under Section 65 (24b) - demand upheld. Manpower Services - Held that - No doubt the earlier word of commercial concern is substituted by word person vide an amendment dated 18th April, 2006, but still we are of the firm opinion that it does not extend to an individual person discharging any other service for which he need the manpower, because the word agency still continues in the definition and for the explanation as above under GTA service, the Services provided by the appellant herein cannot be categorized as supply of manpower by a manpower supply agency - There is no evidence that the consideration was paid separately for manpower but it is apparent that it was required for the job as was agreed to be rendered by the appellant. There can be the levy of supplying manpower services - demand set aside. Cargo Handling Service - Held that - For any service to be called as cargo handling service the loading, unloading, packing or unpacking should be meant only and only for transport, as it is very much evident from the definition under Section 65 (23) of the Act. Not only this, such services should be provided for freight. The definitions specifically mention that mere transportation of goods will not be cargo handling - demand cannot be upheld. Packing Service - Held that - As per the definition under Section 65 (76 b) any activity of packaging including pouch filling bottling, labeling or imprinting of packages is packaging activity till it does not amount manufacture under Section 2 (f) of the Central Excise Act - Since the loose cement is not a marketable commodity unless and until it is packed in a bag, the activity of the appellant was incidental to manufacture and as such was not a packaging service - demand set aside. Demand of Interest and Penalty - Held that - The Provision of Section 73 (3) of Finance Act are parimateria with the provisions of Section 11 A (2B) of Central Excise Act, 1944 - Demand of interest and penalty upheld. Appeal allowed in part.

Summary

Issues Involved:
1. Goods Transport Agency (GTA) Service
2. Cleaning Service
3. Manpower Supply Service
4. Cargo Handling Service
5. Packaging Service
6. Imposition of Interest and Penalty

Detailed Analysis:

(1) GTA Service:
The appellant argued that they are not an agency providing transportation services and thus should not be liable for GTA service tax. The Department rebutted, stating that the freight charges were equivalent to a consignment note. The Tribunal held that to qualify as a Goods Transport Agency, an entity must issue a consignment note and be exclusively meant for providing transport services. Since the appellant did not meet these criteria, the demand for GTA service tax was not sustainable. The Tribunal referenced the case of Nandganj Sihori Sugar Co. Ltd. vs. CCE, Lucknow, and dropped the demand for GTA services.

(2) Cleaning Services:
The appellant contended that their activity was the collection of cement, not cleaning. The Department argued that cleaning through air slide is covered under Section 65 (24b) of the Finance Act, 1994. The Tribunal upheld the demand, stating that cleaning of loose cement through air slide falls within the definition of cleaning services under Section 65 (24b).

(3) Manpower Supply Service:
The appellant claimed that they were engaged in weighment of cement filled bags, not manpower supply. The Department maintained that the service of supplying manpower is covered under the category of manpower supply service. The Tribunal concluded that the appellant’s activities did not constitute manpower supply as defined under Section 65 (68) since there was no evidence of separate consideration for manpower. The Tribunal referenced the case of Ritesh Enterprises vs. CCE, Bangalore, and dropped the demand for manpower supply services.

(4) Cargo Handling Service:
The appellant argued that shifting cement bags within the factory does not constitute cargo handling. The Department countered that any kind of shifting or transportation of goods is cargo handling. The Tribunal held that cargo handling services must involve loading, unloading, packing, or unpacking for transport and freight. Since the appellant’s activities did not meet these criteria, the demand was rightly dropped by the Adjudicating Authority.

(5) Packaging Service:
The appellant argued that their activities were ancillary to manufacture and thus excluded from packaging services. The Department contended that the appellant’s activities did not amount to manufacture and should be taxed as packaging services. The Tribunal observed that packaging activities, including labeling and imprinting, do not constitute manufacturing unless they render the product marketable. Since the appellant’s activities were incidental to manufacture, the Tribunal held that the demand for packaging services was wrongly imposed and dropped the levy.

(6) Imposition of Interest and Penalty:
The Tribunal upheld the imposition of interest and penalty, agreeing with the Commissioner (Appeals) that the provisions of Section 73 (3) of the Finance Act are similar to Section 11 A (2B) of the Central Excise Act, 1944. The Tribunal referenced the case of Union of India vs. Rajasthan Spinning and Weaving Mills, stating that payment of service tax before the issuance of a show cause notice does not provide immunity from penalties if the escape of service tax was intentional.

Conclusion:
Both appeals were partly allowed. The Tribunal dropped the demands for GTA, manpower supply, and packaging services, while upholding the demands for cleaning services and the imposition of interest and penalties. The demand for cargo handling services was also rightly dropped.