By Puloma Dalal, Jayesh Gogri, Mandar Telang, Chartered Accountants
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Loading/unloading & transportation of limestone with processing cannot be classified as cargo handling services.
Facts:The appellant entered into an agreement to provide services as a contractor for hiring of machines, equipments, crushing & screening plant and other services for production of low silicon limestone gitties. The Department issued a show cause notice and contended to levy tax on the said activities under the category of “Cargo Handling Services” for the period up to 09-09-2004 and under the category of “Business Auxiliary Services” for the period from 2004-08. The appellant contended that the activity of transportation/loading and unloading was only incidental to the actual activity of processing of goods carried out by them on behalf of their principals which became taxable only with effect from 16-06-2005 under Business Auxiliary Services.
Held:
Referring to the definitions of “Cargo Handling Services” and “Business Auxiliary Services” and discussing the rules for clarification laid down in section 65A, it was concluded that the essential characteristic of the composite service was not Cargo Handling Service. Allowing the appeal, it was held that the activity of transportation/loading and unloading was only incidental to the actual activity of processing of goods which formed the essential character and that such activity became taxable only after the amendment in the definition of “Business Auxiliary Services” with effect from 16-06-2005, the liability of which the appellant discharged under Business Auxiliary Service, thus no penalty was also found leviable.
