2014 (7) TMI 975 - AT - Service Tax

Cargo handling service - providing manpower services - Assessee contends that lifting, stacking and loading of sugar bags were done by the persons who were on the pay roll of the Appellant - Held that - essentially the present demand is for services use for transporting goods within the factory and also for manpower supplied for manual assistance at various points of loading system using conveyer system though there may be a small part of the service which may be in the nature of manual loading of cargo into railway wagons or trucks which may come within the meaning of Cargo Handling Service. In the facts of the case the service , rendered by Appellants cannot be considered as Cargo Handling service in view of the decisions in the case of S.B. Construction Co. 2006 (8) TMI 28 - HIGH COURT OF JUDICATURE FOR RAJASTHAN (JODHPUR) and Modi Construction Company - 2008 (6) TMI 22 - CESTAT, KOLKATA . There is nothing in the Show Cause Notice to even suggest that there was a positive act on their part to suppress or wilfully misstate any facts to evade service tax. Indeed, as is evident from the various judicial pronouncements, there had been confusion regarding what is cargo handling or even as to what is cargo. In the wake of the appellant s belief that their activity was not cargo handling, their not taking service tax registration or not filing return is understandable. In these circumstances, it is difficult to sustain the allegation of suppression or wilful mis-statement of facts with intent to evade service tax - Decided in favour of assessee.

Summary

Issues:
1. Whether the service provided by the Appellant falls under cargo handling service as per Section 65(23) of the Finance Act, 1994.
2. Whether the Appellant's activity was taxable and if there was any suppression of facts to evade service tax.

Analysis:

Issue 1:
The primary issue in this case revolves around determining whether the service offered by the Appellant qualifies as cargo handling service as defined in Section 65(23) of the Finance Act, 1994. The Appellant argued that they were merely providing labor and not offering cargo handling services. However, the adjudicating authority confirmed that the services provided, including lifting, stacking, and loading of sugar bags, fell within the scope of cargo handling service. The Appellant cited previous judgments in their favor, emphasizing that their activities were confined to factory premises and did not constitute cargo handling. The Tribunal analyzed various judicial pronouncements and concluded that the Appellant's appeals were sustainable on merit. The Tribunal highlighted that the Appellant's belief that their activity did not fall under cargo handling, coupled with the confusion surrounding the definition of cargo handling, justified their non-compliance with service tax regulations.

Issue 2:
Regarding the second issue of whether the Appellant's activity was taxable and if there was any suppression of facts, the Tribunal found that there was no evidence of deliberate suppression or willful misstatement by the Appellant to evade service tax. The Tribunal acknowledged the genuine belief held by the Appellant that their services were not taxable under cargo handling. In light of this, the Tribunal allowed the Appellant's appeals and set aside the Orders-in-Appeal that upheld the demand for service tax, penalties, and interest. The Tribunal's decision was based on the lack of concrete evidence supporting the claim of suppression or intentional misstatement by the Appellant, coupled with the ambiguity surrounding the classification of the Appellant's services as cargo handling.

In conclusion, the Appellate Tribunal CESTAT NEW DELHI ruled in favor of the Appellant, emphasizing that the services provided did not fall under the category of cargo handling as defined by the Finance Act, 1994. Additionally, the Tribunal found no evidence of intentional evasion of service tax by the Appellant, considering the genuine belief held by the Appellant regarding the taxability of their services.