2017 (6) TMI 511 - AT - Service Tax

Business Auxiliary Services - liability of tax - case of appellant is that they have shared some expenditure for common facilities like electricity, canteen, transport of employees etc., with the sister concern. Some portion of the expenditure attributable to the other company was collected and shown in their income. In an arrangement of sharing of facilities, there can be no element of promotion of business - Held that - It is not clear as to what type of service is being provided by the appellant and on whose behalf. There is no third party involved at all, in the whole transaction. Certain common expenditure towards various facilities like canteen, transportation, etc. were shared among group companies. Such arrangement cannot be considered as activities taxable under Business Auxiliary Services - The impugned order did not discuss the legal scope of tax entry applicable to the case in hand and the same is not sustainable. Cargo Handling Service - appellant claims that they are not a Cargo Handling Agency - Held that - it is seen that nowhere in the proceedings before the lower authorities, the exact nature of work carried out by the appellant has been elaborated and applied to the statutory definition - there are two conditions to be satisfied. There must be a cargo accepted by the transporter for carrying the goods from one place to another. A commodity becomes a cargo and thereafter only, loading and unloading in a freight terminal becomes a cargo handling service. Further, the service provider must incidentally be involved in loading or unloading or packing, unpacking of the cargo. These conditions are not met in the present case. As such, the impugned order confirming the service tax liability is without merit. Manpower Recruitment and Supply Agency - case of appellant is that they are not acting as Manpower Supply Agency - Held that - the appellant have deputed some staff to their group companies for certain specific work for the limited period. The appellants are not engaged in the business of Manpower Recruitment or Supply Agency Services . The provisions of Section 65(105)(K) is not applicable to the present situation - the impugned order had confirmed the service tax liability only on the ground that certain considerations have been received with reference to deputation of staff and hence, service tax liability. In view of the factual and legal position recorded above, the summary finding of the impugned order is not sustainable. Demand not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Tax liability under Business Auxiliary Service
2. Tax liability under Cargo Handling Service
3. Tax liability under Manpower Supply Agency
4. Time bar justification for the demand

Tax liability under Business Auxiliary Service:
The appellant's income from a sister concern was deemed taxable under Business Auxiliary Service, Manpower Supply Services, and Cargo Handling Services. The appellant argued that shared expenses for common facilities did not involve business promotion. The tribunal found that the shared expenditure did not constitute taxable activities under Business Auxiliary Services as there was no promotional element. The order lacked clarity on the type of service provided and the involvement of third parties, thus ruling against the tax liability.

Tax liability under Manpower Supply Agency:
The appellant contested tax liability under Manpower Recruitment and Supply Agency, claiming they were not acting as such. They argued that deputed employees were for specific work and not under the agency services category. Citing relevant case law, the tribunal agreed with the appellant, ruling that the staff deputation did not fall under Manpower Recruitment or Supply Agency Services, thereby rejecting the tax liability.

Tax liability under Cargo Handling Service:
The appellant's involvement in Cargo Handling Services was disputed, with the tribunal noting a lack of detailed explanation on the nature of work. Relying on legal precedents, it was established that the appellant's activities did not meet the statutory definition of Cargo Handling Services. The tribunal ruled in favor of the appellant, stating that the service tax liability confirmation was without merit.

Time bar justification for the demand:
The appellant also argued that the demand was time-barred, with no valid reason for invoking an extended period. However, the judgment did not explicitly address this issue as the tribunal primarily focused on the tax liability under different service categories.

In conclusion, the tribunal set aside the impugned order, allowing the appeal based on the lack of taxable activities under the mentioned service categories and the absence of clarity in the original order's findings.