2019 (12) TMI 419 - AT - Service Tax

Classification of services - Cargo Handling Service or not - shifting of material within factory premises - extended period of limitation - HELD THAT - As far as shifting of material within the factory from one place to another is concerned, it is now well settled and is no longer res-integra that such movement of material within the factory does not amount to cargo handling and is not leviable to service tax under Cargo Handling Service - This issue has been settled by Hon ble Apex Court in the case of Signode India Limited 2017 (3) TMI 934 - SUPREME COURT , where it was held that It is nobody's case before us that the appellant is a cargo handling agency. All activity undertaken by the appellant, though related to packing activity, is at a stage when the goods are yet to clear the factory gate as manufactured goods for onward transportation. Cargo Handling Service pre supposes that the material being handled is cargo. Cargo means goods transported by a vessel, airplane or vehicle . Material movement of goods within the factory premises do not qualify as cargo and any such handling or shifting of material does not amount to cargo handling and therefore is not chargeable to service tax under Cargo Handling Service - the demand confirmed by the impugned order with respect to cargo handling services needs to be set aside along with interest and corresponding penalties. Management, Maintenance or Repair Service - non-payment of service tax - HELD THAT - The first appellate authority has not recorded any findings and therefore it is deemed appropriate to remand the matter back to him for the limited purpose of recording his findings on this demand. Appeal allowed in part and part matter on remand.

Summary

Issues:
1. Whether shifting of material within factory premises amounts to Cargo Handling Service?
2. Whether invoking the extended period of limitation is proper?
3. Findings on the demand under Management, Maintenance or Repair Service.

Analysis:
1. The appeal was filed against a show cause notice demanding service tax under Cargo Handling Service and Management, Maintenance or Repair Service, along with interest and penalties. The appellant was registered for providing Management, Maintenance or Repair Service and was found to have not discharged service tax correctly for services provided to a cement company. The original authority confirmed the demands and penalties, which was upheld by the first appellate authority. However, the first appellate authority only examined two issues related to Cargo Handling Service and the extended period of limitation, without addressing the demand for Management, Maintenance or Repair Service.

2. The Tribunal found that the shifting of material within the factory premises does not amount to Cargo Handling Service, citing precedents and definitions of "cargo." It was established that handling or shifting material within the factory does not qualify as cargo handling, as it does not involve transportation of goods by a vessel, airplane, or vehicle. Therefore, the demand for service tax under Cargo Handling Service was set aside, along with interest and penalties.

3. Regarding the demand under Management, Maintenance or Repair Service, the Tribunal noted the lack of findings by the first appellate authority. As a result, the matter was remanded back to the first appellate authority to record findings on this demand. The appeal was allowed in part, setting aside the demand, interest, and penalties related to Cargo Handling Service, and remanding the issue of Management, Maintenance or Repair Service demand back to the first appellate authority for further consideration.

In conclusion, the appeal was disposed of with the demand for Cargo Handling Service being set aside, and the issue of Management, Maintenance or Repair Service demand being remanded for additional findings by the first appellate authority.