2023 (9) TMI 1191 - AT - Service Tax

Port service correctly classified as Cargo Handling, not Manpower Recruitment. Demand for service tax rejected.

AVB Handling Versus C.C.E. & S.T. -Rajkot

AVB Handling Versus C.C.E. & S.T. -Rajkot - TMI Issues Involved:1. Classification of Service: Whether the service provided by the appellant is classifiable under Cargo Handling Service or Manpower Recruitment or Supply Agency Service.2. Invocation of Extended Period: Whether the extended period for raising the demand is applicable.Issue 1: Classification of ServiceThe appellant is engaged in providing cargo handling services at Kandla Port, including loading, unloading, cutting of bags, spreading of zola, and cleaning of jetty. The department contended that the service should be classified under Manpower Recruitment or Supply Agency Service under Section 65(105), raising a differential service tax demand of Rs. 14,92,988/-. The appellant argued that their service is correctly classifiable under Cargo Handling Service as the contract with clients is based on work performed, not on the labor deputed. The control of manpower remains with the appellant, and the clients are not concerned with the number or type of labor deployed. The appellant supported their claim with various judgments, including M/s. Ritesh Enterprises & Karwar Dock & Port Labour Cooperative Society Ltd, K. Damodarareddy, and M/s. Divya Enterprises, which held that services contracted for specific jobs and not for supply of manpower do not fall under Manpower Recruitment or Supply Agency Service.The Tribunal examined client letters and invoices, which confirmed that the appellant charged based on the metric tons of goods handled, not on labor wages. This supported the classification under Cargo Handling Service. The Tribunal referred to the judgments cited by the appellant, which consistently held that contracts for job execution, not manpower supply, should not be classified under Manpower Recruitment or Supply Agency Service.Issue 2: Invocation of Extended PeriodThe demand was raised for the period 2006-2007 to 2010-2011 by issuing a show cause notice dated 26.09.2011, invoking the extended period. The appellant argued that they were registered with the service tax department and paid service tax under Cargo Handling Service, with all details declared in their ST-3 returns. Therefore, there was no suppression of facts, and the extended period could not be invoked. The Tribunal agreed, noting that the department had access to the details provided in the ST-3 returns and could have taken action earlier. Thus, the demand was hit by the limitation for the extended period.ConclusionThe Tribunal concluded that the service provided by the appellant is correctly classifiable under Cargo Handling Service and not under Manpower Recruitment or Supply Agency Service. Consequently, the demand for differential service tax was not sustainable. The appeal was allowed, and the impugned order was set aside.