2008 (6) TMI 92 - AT - Service Tax

CESTAT rules on liability for cargo handling services, upholds service tax demand

The Appellate Tribunal CESTAT NEW DELHI ruled that the applicant was liable to pay service tax for providing cargo handling services as per the ... As per the Section 65(23), the cargo handling service means loading/unloading, packing/unpacking of cargo and includes cargo handling service provided for freight in special container or for non-containerized freight – in instant case applicants are rendering the service which include all work assignments relating to packing of cement into bags and loading of these bags into wagons etc. - In view of the above agreement, applicants are providing cargo handling service - stay not granted Issues:- Whether the applicant is liable to pay service tax for cargo handling services.- Whether the applicant's contention of being only a supplier of manpower is valid.- Whether the demand for service tax and penalties is sustainable.Analysis:The judgment by the Appellate Tribunal CESTAT NEW DELHI involved a case where the applicant sought waiver of pre-deposit of service tax amounting to Rs. 10,77,467/- and penalties. The demand was imposed on the grounds that the applicant provided cargo handling services. The applicant contended that they were merely suppliers of manpower and not involved in cargo handling services, challenging the sustainability of the demand.The Tribunal considered the definition of cargo handling service under Section 65(23) of the Act, which includes loading, unloading, packing, or unpacking of cargo. The Tribunal examined the agreement presented by the Revenue, indicating that it was for cargo handling services. The agreement outlined work assignments related to packing cement into bags, loading these bags into wagons and trucks, and stacking them in designated areas. Based on the agreement's terms, the Tribunal concluded that the applicants were indeed providing cargo handling services, thus rejecting the request for a waiver of service tax amount.Consequently, the Tribunal directed the applicants to deposit the confirmed service tax amount within eight weeks. However, the Tribunal waived the pre-deposit of penalties for the appeal hearing upon the deposit of the service tax amount. The case was scheduled for compliance reporting on a specified date.In summary, the judgment clarified that the applicant was liable to pay service tax for providing cargo handling services as per the agreement's terms, dismissing the contention of being solely a supplier of manpower. The demand for service tax and penalties was deemed sustainable, requiring the applicant to comply with the directive to deposit the service tax amount while allowing a waiver of penalties for the appeal hearing.