Cargo handling excludes mere transportation, but railway siding charges remained taxable as renting of immovable property.

Mere transportation of coal ash through a contractor did not amount to cargo handling service because the appellant itself did not undertake loading, unloading, packing, unpacking or allied handling activity; the demand on that count was set aside. Charges for use of the railway siding, however, fell within renting of immovable property for the relevant period where the assessee failed to show by documentary evidence that the arrangement was outside the taxable ambit or that it retained possession, control and maintenance of the siding; service tax, interest and penalty were upheld. The appeal was therefore partly allowed.

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Issues: (i) whether lifting and transporting coal ash or bed ash pursuant to the arrangement fell within cargo handling service; and (ii) whether the charges for railway siding facility attracted service tax under renting of immovable property.

Issue (i): whether lifting and transporting coal ash or bed ash pursuant to the arrangement fell within cargo handling service.

Analysis: Cargo handling service covers loading, unloading, packing or unpacking of cargo and allied handling services, but excludes mere transportation of goods. The arrangement showed that transportation and labour were to be provided by the contractor, while the appellant only recovered a nominal amount on a per-trip basis for the siding arrangement. On those facts, the appellant did not itself undertake cargo handling activity.

Conclusion: The demand under cargo handling service was not sustainable and the issue was decided in favour of the assessee.

Issue (ii): whether the charges for railway siding facility attracted service tax under renting of immovable property.

Analysis: Renting of immovable property includes renting, letting, leasing, licensing or other similar arrangements for business use. The amendment inserting the clarification with effect from 16.05.2008 expanded the scope to include allowing or permitting use of space irrespective of transfer of possession or control. For the disputed prior period, the appellant failed to establish by documentary evidence that the railway siding was rented out without possession or control being transferred, or that it itself retained control and maintenance of the siding.

Conclusion: Service tax under renting of immovable property was upheld, along with interest and penalty, and the issue was decided against the assessee.

Final Conclusion: The appeal succeeded only on the cargo handling issue and failed on the renting of immovable property issue, resulting in a partial allowance of the appeal.

Ratio Decidendi: Mere transportation arranged through a contractor does not amount to cargo handling service, while charges for use of immovable property for business purposes are taxable where the assessee fails to prove that the arrangement lay outside the taxable ambit for the relevant period.

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