2008 (1) TMI 69 - AT - Service Tax

Tribunal reclassifies services, exempts from tax

The Tribunal allowed the appeal, overturning the categorization of the appellants' services as 'Cargo Handling Services' and instead recognizing them as a ... Appellants are covered under “Manpower Recruitment Agency” from the date when it was introduced - Revenue proceeded to cover the same activity of supply of manpower under the category of “Cargo Handling Services” for the previous period - only supplying manpower and they did not have any control over loading machines where cement bags were packed and loaded. - held that the supply of manpower cannot be equivated to the services of Cargo Handling Issues: Appeal against categorization of services as 'Cargo Handling Services' instead of 'Manpower Recruitment Agency.'Analysis:1. The appeal arose from the Commissioner (Appeals) confirming the Order-in-Original passed by the ACCE, Palakkad-I Division, categorizing the appellants under 'Cargo Handling Services' instead of 'Manpower Recruitment Agency.' The appellants argued they only supplied manpower without control over loading machines, but their plea was rejected.2. The Counsel cited precedents where similar contracts were analyzed, leading to the conclusion that mere supply of manpower does not constitute 'Cargo Handling Services.' The bench's decision in the case of K.K. Appachan and Renu Singh & Co. supported the appellant's stance, urging the appeal to be allowed.3. The SDR contended that the Agreement indicated the appellants' responsibility for cargo handling, supporting the Commissioner's findings. However, the bench, after reviewing the terms of agreement and contract in the case of K.K. Appachan, reiterated that supplying manpower does not equate to cargo handling services, aligning with the Tribunal's decision in J & J Enterprises Vs. CCE.4. The Tribunal's detailed analysis emphasized that supplying laborers, even if they played a role in handling cargo, does not amount to cargo handling services. The Tribunal highlighted that manpower supply cannot be equated with providing the specific service, as it would contradict the definitions of various services in the statute.5. Consequently, the Tribunal concluded that the impugned order was not legally sound, allowing the appeal and relieving the appellants from liability to pay service tax under the category of cargo handling services. The judgment also clarified that since the issue involved interpretation of law, the longer period could not be invoked, absolving the appellants from interest and penalties under the Finance Act, 1994.