By Puloma Dalal, Jayesh Gogri, Mandar telang Chartered Accountants
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Packing/unpacking by automatic/mechanized process is not covered under cargo handling services.
Proceedings initiated without following classification and valuation discipline, are liable to be set aside.
Facts:
Department issued Show Cause Notice to the Respondent assessee alleging non/short payment of service tax under coal handling and loading, manpower recruitment or supply agency and cleaning services.
The respondents contended that service tax was demanded without specifying categories and taxable values separately. Further, the respondents were merely collecting urea in bags from bagging plants and thereafter, these bags were stacked on the conveyor. The conveyor system then carried the bags to railway wagons or trucks. Accordingly, the services were not in the nature of cargo handling services. The respondents further argued that since the labourers were employed for removal of stones from coal through conveyor systems, these activities did not fall within the ambit of manpower recruitment or supply agency services. The respondents were only cleaning the conveyer belts and the conveyor system for efficient conveyance of goods and therefore, these activities cannot be considered to be cleaning services, leviable to service tax.
Learned Appellate Commissioner held that the respondents were not liable to service tax under following grounds:
The respondents were only engaged in packing and unpacking of bags by automatic/mechanized process and therefore, the services were not covered under cargo handling services.
Cleaning of conveyor system for transport of bags was not covered under cleaning services.
Since the employees were employed by the respondents and they were not the employees of the customer, the services were not manpower recruitment or supply agency services.
Held:
Agreeing to the decision delivered by the learned Appellate Commissioner and having regard to the fact that Show Cause Notice was defective and the proceedings were initiated without applying classification discipline, the appeal was dismissed.
