2018 (8) TMI 242 - AT - Service Tax

Cargo Handling Services - Activity of loading of material in vehicles, segregation of material, unloading, stacking and shifting of materials within the factory premises - Held that - The Hon ble Supreme Court has also in the case of Dy. Commissioner, Central Excise & Anr. vs. Sushil & Company 2016 (4) TMI 987 - SUPREME COURT had an occasion to examine the similar case, where it was held that two conditions for considering any service to be Cargo Handling Service need to be satisfied, namely; (1) there must be a cargo i.e. a packed or unpacked commodity accepted by a transporter or carrier for carrying the same from one destination to another. It is only after the commodity becomes a cargo, its loading and unloading at the freight terminal for being transported by any mode becomes a cargo handling service, if it is provided by an independent agency and; (2) the service provider must independently be involved in loading-unloading or packing-unpacking of the cargo. It is evident that moving of goods within the factory cannot be brought within the definition of Cargo and Cargo Handling Service - appeal allowed - decided in favor of appellant.

Summary

Issues:
Interpretation of whether activities carried out by labor contractors within a factory premises are liable for Service Tax under Cargo Handling Services as per Section 65 (23) of the Finance Act 1994.

Analysis:
The judgment involved two appeals with identical facts regarding labor contractors engaged by a company for activities within a factory premises. The Revenue contended that these activities were liable for Service Tax under Cargo Handling Services. The authorities had ordered payment of Service Tax, interest, and penalties, which were challenged in the appeals.

The advocates for the appellants argued that activities within the factory premises should not fall under the definition of Cargo Handling Services. They cited judgments, including one from the Hon'ble High Court of Allahabad, to support their position. The Tribunal had also taken a similar view in other cases, which the advocates requested to be extended to the present appellants.

The Revenue justified the impugned orders, but upon review of the case records and arguments from both sides, the Tribunal considered the decision of the Hon'ble High Court of Allahabad. The High Court's decision highlighted that activities within a factory, involving transportation of goods but not for movement outside the factory, do not constitute Cargo Handling Services liable for Service Tax. The Tribunal also referred to a Supreme Court case emphasizing that moving goods within a factory does not fall under the definition of Cargo Handling Services.

Based on the above analysis and legal precedents, the Tribunal set aside the impugned orders and allowed the appeals. The judgment clarified that activities carried out within a factory premises, involving the transportation of goods but not for external movement, do not qualify as Cargo Handling Services subject to Service Tax.