2015 (12) TMI 327 - AT - Service Tax

Tribunal rules in favor of appellant, stating labor supply not Cargo Handling Service.

The Tribunal allowed the appeal, ruling that the appellant's activities of providing contract labor for specific job work did not constitute Cargo ... Classification of service - Cargo Handling Service - imposition of penalty under section 75A, 76, 77 and 78 - Held that:- Appellant in this case is a small contractor who hires labour and provides the same to Shreyans and his service may not be equated with activities covered under the definition of Cargo Handling Service. The Commissioner (Appeals) in his order stated that the appellant that have not brought on records to prove conclusively that they are merely supplying the labour. But we find that the Revenue has not established beyond doubt that a contract was entered into between the appellant and M/s.Shreyans Industries Ltd. for Cargo Handling. We find that the activities undertaken are akin to labour jobs. The labour is not employed by the appellant but only hired and used in the factory of Shreyans. - activity undertaken by the appellant is not covered under the category of Cargo Handling Service. The appellant is as individual engaged in providing contract for various jobs and in the circumstances the activity of the appellant does not come under the purview of Cargo Handling Service. - Decided in favour of assessee. Issues: Classification of service under Cargo Handling Service, Demand of service tax, Imposition of penaltiesIn this case, the appellant appealed against the Order-in-Appeal confirming the classification of the service they provided as Cargo Handling Service, which resulted in the demand of service tax with interest and penalties under various sections of the Finance Act, 1994. The appellant, a contractor providing labor to a company engaged in paper manufacturing, argued that they were merely supplying contract labor for specific job work and not engaging in activities falling under Cargo Handling Service. The Revenue contended that the appellant's activities did amount to providing Cargo Handling Service subject to service tax. The Tribunal considered the definitions of Cargo Handling Service as per the Finance Act, 1994 and noted that the appellant, as a small contractor hiring labor for specific tasks, did not fit the definition of a Cargo Handling Agency. The Commissioner (Appeals) had not conclusively proven that the appellant was providing Cargo Handling Service, as there was no clear contract for such services. The Tribunal found that the appellant's activities were more in line with providing labor for specific jobs within the factory, rather than engaging in Cargo Handling Service. The appellant also relied on a circular by the Board stating that hiring labor for loading/unloading would not be taxed under Cargo Handling Service. The Tribunal concluded that the appellant's activities did not fall under the purview of Cargo Handling Service based on the circular and the nature of the appellant's work as an individual providing contract labor for various tasks. Consequently, the appeal was allowed, and the appellant was not liable for service tax under Cargo Handling Service.