Manpower supply for packing and loading is not cargo handling service where workers only assist and do not control the operation.

Supply of manpower for packing, loading and unloading cement bags was treated as manpower assistance rather than cargo handling service because the workers only assisted the process and did not control the cargo handling operation. On that classification dispute, the demand failed. Since the issue was one of legal interpretation of service classification, the extended period of limitation, interest and penalties were also not sustainable. The impugned demand was therefore set aside, granting the assessee consequential relief.

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Issues: (i) Whether supply of manpower for packing, loading and unloading of cement bags could be classified as cargo handling service. (ii) Whether, in a case turning on interpretation of the service classification, the longer period, interest and penalties were sustainable.

Issue (i): Whether supply of manpower for packing, loading and unloading of cement bags could be classified as cargo handling service.

Analysis: The activity in question was found to be substantially similar to an earlier decided case involving identical contractual terms and factual setting. The workers supplied only assisted in the packing and loading process and had no control over the machinery or the overall cargo handling operation. Mere supply of labour could not be equated with rendering cargo handling service, particularly when the assessee was already treated as a manpower supply provider for the relevant activity.

Conclusion: The classification under cargo handling service was not sustainable and the assessee succeeded on this issue.

Issue (ii): Whether, in a case turning on interpretation of the service classification, the longer period, interest and penalties were sustainable.

Analysis: Since the dispute was resolved in favour of the assessee on the proper nature of the service, the demand could not be upheld on the basis of extended limitation. The decision also accepted that the controversy involved interpretation of law, and therefore the ancillary levy of interest and penalties could not survive.

Conclusion: The longer period, interest and penalties were not sustainable against the assessee.

Final Conclusion: The impugned demand was set aside, and the assessee obtained full relief with consequential benefits.

Ratio Decidendi: Supply of manpower that only assists in handling operations, without control over the cargo handling activity itself, cannot be treated as cargo handling service; where the dispute is one of legal classification, extended limitation and penal consequences do not survive absent a sustainable demand.

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