2018 (11) TMI 845 - AT - Service Tax

Cargo Handling Services - transport of materials from the plant to the yard of the appellants and thereafter the appellants do the said processes and reload the material into trailers and trucks for despatch to the customers - services associated with the production and manufacture of products by their clients M/s RINL - Business Auxiliary service. Service tax on straightening and cutting of TMT bars - Held that - Department themselves were of the view that these activities amount to manufacture and had agitated the matter before the Tribunal and Supreme Court. It has been finally settled by Hon ble Supreme Court that the process of cutting and bending is not a process of manufacture and no Excise Duty is payable on these activities. Therefore, the services rendered by the appellant by processing the goods manufactured by RINL are exigible to service tax - payment of service tax and interest within the normal period is liable to be confirmed - demand for the extended period is liable to be set aside. Service tax on Cargo Handling Service - Held that - The cargo handling undertaken by appellant in the form of loading and unloading are a separate service for which separate amount was paid by their client and the transportation service rendered by the appellant was a separate service for which a separate amount was paid by their client. Thus, the cargo handling services are chargeable to service tax at the hands of the appellant - However, for the purpose of computation of cargo handling service, the amounts which were paid to them for transportation have also been included in the impugned order. These amounts need to be deducted as the transportation is an independent service and does not form part of the cargo handling service rendered by them. Appeal disposed off.

Summary

Issues:
1. Whether the activities undertaken by the appellant are chargeable to service tax under "Business Auxiliary Services" and "Cargo Handling Services"?
2. Whether the service tax demand raised on the appellant is valid and penalties imposed are justified?

Analysis:
1. The appellant was engaged in straightening, cutting, and bending of iron & steel articles received from a steel plant. The Revenue contended that the activities fall under "Cargo Handling Services" and "Business Auxiliary Services." The lower authorities confirmed the demands, but the appellant argued that the activities do not amount to manufacture. The Tribunal and Supreme Court settled this issue, stating that the activities do not constitute manufacture, thus excluding them from service tax under "Business Auxiliary Services." The service tax for the period 2005-06 was also deemed time-barred.

2. Regarding cargo handling services, the appellant claimed that it was part of transportation and not liable to service tax. However, the Revenue argued that separate amounts were received for cargo handling and transportation. The Tribunal found that the cargo handling services were chargeable to service tax, but the amounts received for transportation needed to be deducted for the calculation. The penalties were reduced or set aside accordingly.

In conclusion, the appeal was disposed of with the confirmation of service tax and interest within the normal period, setting aside the demand for the extended period, and adjusting penalties based on the findings for both issues.