Cargo handling service narrowly construed; mining-related crushing and grading of dolomite supported waiver of pre-deposit.

Breaking, crushing and grading dolomite under a mining contract was treated as prima facie mining activity, not cargo handling, because transportation was only incidental to the work. The scope of cargo handling service was read narrowly to cover packing, unpacking, loading and unloading of goods for transport by recognised modes. A cited precedent was distinguished on facts as it concerned only transportation and no mining element. On that basis, the applicant showed a strong prima facie case and was granted waiver of pre-deposit and stay of recovery pending the appeal.

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Issues: Whether the applicant was prima facie liable to service tax as a cargo handling agent, or whether the activity was in the nature of mining service, warranting waiver of pre-deposit and stay.

Analysis: The applicant was engaged under a mining contract for breaking, crushing and grading dolomite for onward supply to the steel plant, and transportation was only incidental to that activity. The scope of cargo handling service was read narrowly in light of the Board circular, which described cargo handling as packing, unpacking, loading and unloading of goods meant for transportation by recognized modes. The cited precedent on cargo handling was distinguished on facts because it involved only transportation and no mining element. Since mining service had also been brought within the tax net and the applicant was registered for that activity, the applicant was found to have a strong prima facie case.

Conclusion: The applicant was entitled to waiver of pre-deposit and stay of recovery pending disposal of the appeal.

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