2006 (8) TMI 624 - AT - Service Tax

Summary

Issues involved:
1. Whether the appellant is liable to pay service tax for supplying labors to a company.
2. Whether the activity of supplying labors falls under the category of 'cargo handling service'.
3. Whether the appellant is required to pre-deposit the service tax amount and penalty.

Analysis:

Issue 1: Liability to Pay Service Tax for Supplying Labors
The appellant was required to pre-deposit a service tax amount and equivalent penalty for supplying labors to a company. The Revenue proceeded to levy service tax on the appellant, contending that the activity of supplying labors falls under the category of 'cargo handling service'. However, the appellant argued that they only supplied labors to their clients and did not engage in cargo handling services. The Tribunal noted that the appellants were paid a commission for supplying labors and were not engaged in cargo handling services. The Tribunal found that the appellants were only carrying out the supply of labors, and not providing cargo handling services. Therefore, the issue of liability to pay service tax for supplying labors was resolved in favor of the appellant.

Issue 2: Classification of Activity as 'Cargo Handling Service'
The Revenue argued that the appellants were providing a range of cargo handling services along with other services like transportation arrangement, making them liable to pay service tax. However, after considering the submissions from both sides, the Tribunal found that the appellants were solely involved in the supply of labors and were not engaged in cargo handling services. The Tribunal concluded that the appellants' activity did not fall under the category of 'cargo handling service'. Therefore, the classification of the activity as 'cargo handling service' was not applicable in this case.

Issue 3: Requirement of Pre-Deposit and Penalty
The Tribunal granted the appellant's stay application unconditionally, waiving the pre-deposit requirement in the matter. The Tribunal barred the Revenue from recovering the amounts until the appeal was disposed of. The appeal was scheduled to come up for hearing in its turn, indicating that the requirement of pre-deposit and penalty was temporarily waived pending the appeal's resolution.

In conclusion, the Tribunal ruled in favor of the appellant, stating that the activity of supplying labors did not amount to cargo handling services, thereby relieving the appellant from the liability to pay service tax and penalty. The Tribunal also granted a waiver of pre-deposit and stayed the recovery of amounts until the appeal was finalized.