2017 (8) TMI 1007 - AT - Service Tax

Classification of services - appellants are engaged in carrying out loading of AC sheets and its accessories at M/s. Visaka Industries as per the agreement entered with M/s. Visaka Industries - The main reason for the department to hold that the activity would not be mere man power recruitment and supply agency services but cargo handling services is that there is a condition that the appellant s representatives should be present while loading. That there is supervisory control and therefore would be cargo handling services - whether the services would be classified under Cargo Handling Service or under Man Power Recruitment & Supply Agency Services? - Held that - In The Deputy Commissioner, Central Excise & Another Versus Sushil & Company 2016 (4) TMI 987 - SUPREME COURT the Hon ble Apex Court had considered whether the activity of supplying workers for loading/unloading cement as per the agreement would amount to Cargo Handling Service, and it was held that the service does not amount to Cargo Handling Service - the subject services would not fall under Cargo Handling Services - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the appellants are providing Cargo Handling Service and not discharging service tax for such services.
2. Validity of the demand confirmed by the original authority along with penalties imposed under Section 76, 77, and 78 of the Finance Act, 1994.
3. Classification of services provided by the appellants under Cargo Handling Services or Man Power Recruitment & Supply Agency Services.

Analysis:
1. The case involved a dispute regarding the nature of services provided by the appellants, focusing on whether they were offering Cargo Handling Services without discharging the applicable service tax. The original authority confirmed a demand of &8377; 1,87,435/- along with penalties. The Commissioner (Appeals) upheld the decision, leading to the current appeal.

2. The appellants argued that they were not providing Cargo Handling Services but were engaged in loading AC sheets and accessories at a specific company's premises. They contended that the services fell under Man Power Recruitment & Supply Agency Services, for which they were registered and paying taxes accordingly. The department's classification was based on payment terms, but the appellants emphasized their limited responsibility post-loading. Reference was made to relevant judgments and circulars to support their stance.

3. The department maintained that the appellants' activities constituted Cargo Handling Services due to supervisory control and presence requirements during loading. The contract terms were examined to determine the nature of services provided. Drawing parallels from a previous judgment, the Tribunal concluded that the services did not meet the criteria for Cargo Handling Services. The presence of the appellants' representatives during loading did not alter the fundamental nature of the services provided. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential reliefs.

This detailed analysis of the legal judgment highlights the key issues, arguments presented by both parties, and the Tribunal's reasoning leading to the final decision in favor of the appellants.