2017 (12) TMI 1188 - AT - Service Tax

Classification of service - site formation clearance excavation and earth moving service or Cargo Handling Service? - benefit of N/N. 17/2005-ST dated 7-6-2005 - Held that - we find that loading unloading and transportation is ancillary there are various other activities where main service such as quarrying excavating sizing stockpiling over burden removal dozing etc. therefore it cannot be said that service provided by the respondent is mainly transportation loading unloading therefore this being ancillary service to the various other main services overall services cannot be classified as Cargo Handling Service - once the departments proposal of classification fails entire show cause notice is liable to be quashed. Services involved is correctly classifiable under Site Formation and clearances excavation and earth moving and demolish service provided for construction of road of National Highway the same is exempted under N/N. 17/2005-ST dated 7-6-2005. Appeal dismissed - decided against appellant.

Summary

Issues:
Classification of services under Cargo Handling Services for service tax liability.

Analysis:
The case involved a dispute regarding the classification of services provided by the respondent under the category of Cargo Handling Services for the purpose of service tax liability. The respondent was engaged in activities related to the transport of goods by road and mining services. The dispute arose from a contract awarded to the respondent by a principle for the construction of a national highway. The Revenue contended that the services provided fell under Cargo Handling Services, attracting service tax liability. However, the respondent argued that the services were in connection with the construction of roads, making them eligible for exemption under Notification No. 17/2005-ST.

The key contention revolved around the nature of the services provided by the respondent. The contract involved activities such as loading, segregating, sizing, stockpiling, excavating, transportation, unloading, and feeding of boulders into a crushing plant, as well as overburden removal and handling of soft rock. The Tribunal noted that the services provided were integral to the construction of roads, including site formation, clearance, excavation, and earth moving services. These activities were exempted under Notification No. 17/2005-ST for construction of roads, which the respondent argued applied to their case.

The Tribunal observed that the main services provided by the respondent, such as quarrying, excavating, and overburden removal, were not primarily related to cargo handling. While loading, unloading, and transportation were involved, they were deemed ancillary to the main services provided. Therefore, the overall services could not be classified as Cargo Handling Services. The Tribunal agreed with the Commissioner(Appeals) that the services were correctly classifiable under Site Formation and Clearances, exempting them from service tax liability.

Furthermore, the Tribunal highlighted that the contract between the parties involved a series of activities related to excavation and transportation in connection with the construction of a national highway. The services provided by the respondent were found to be incidental to mining activities and not solely focused on cargo handling. Citing relevant case laws, the Tribunal concluded that the respondent was not acting as an agent for Cargo Handling Services and that the issue had been addressed in previous judgments.

In light of the above analysis, the Tribunal upheld the decision of the Commissioner(Appeals) and dismissed the Revenue's appeal, thereby confirming that the services provided by the respondent were not liable for service tax under the category of Cargo Handling Services. The case was decided in favor of the respondent based on the nature and scope of the services provided in connection with the construction of roads.