Applicant directed to deposit Rs. 4.00 lakh for Service Tax demand. Waiver upon compliance. Recovery stayed pending Appeal.

The Applicant was directed to deposit Rs. 4.00 lakh within three weeks from the date of the Order for the demand of Service Tax and penalty related to providing cargo handling services. The predeposit of the remaining Service Tax amount was waived upon compliance, and recovery was stayed pending the Appeal as the Applicant's activities fell within the definition of Cargo Handling Service under the Finance Act, 1994.

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Issues:
Demand of Service Tax and penalty on the ground of providing cargo handling service.

Analysis:
In this case, a show cause notice was issued to the Applicant for the demand of Service Tax and imposition of penalty based on the allegation that the Applicant was providing cargo handling service. The Work Order detailed various tasks such as receipt, sorting, shifting of reels, packing, marking, stacking, loading, unloading of paper bundles and reels, and brick stacking. The Applicant received amounts for the services provided as per the Work Order. During investigation, a statement of the service provider was recorded, confirming that the work undertaken was limited to the Work Order.

The definition of Cargo Handling Service under clause (23) of Section 65 of the Finance Act, 1994 includes loading, unloading, packing, or unpacking of cargo, but excludes handling of export cargo, passenger baggage, or mere transportation of goods. As the Applicant was involved in loading and unloading paper bundles and reels into wagons and lorries, it was determined that total waiver of predeposit of the Service Tax was not justified. Consequently, the Applicant was directed to deposit Rs. 4.00 lakh within three weeks from the date of the Order. Upon compliance with this directive, the predeposit of the remaining Service Tax amount was waived, and recovery of the same was stayed during the pendency of the Appeal.

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