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2016 (4) TMI 987 - SUPREME COURT

2016 (4) TMI 987 - SUPREME COURT - 2016 (42) S.T.R. 625 (SC) - Cargo Handling Service - Contract entered for the purpose of packing, loading and unloading etc. of the goods, for which labour was supplied by the respondent to M/s Birla Corporation Ltd. - Department contended that it was not appropriate for the High Court to deal with the said writ petition, bypassing the adjudicatory machinery provided under the Act, more so when the statutory appeals against the adjudication orders are also prov .....

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re, we are of the opinion that the High Court did not commit any mistake or illegality in entertaining the writ petition when no disputed questions of fact were involved and the legal issue was to be decided on the basis of the facts, as admitted by the parties, which were so specifically recorded by the High Court itself. - Whether the contract could be treated as 'Cargo Handling Service' within the meaning of Entry 23 of Section 65 of the Act - Labour is supplied by the respondent to M/s B .....

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odity accepted by a transporter or carrier for carrying the same from one destination to another. It is only after the commodity becomes a cargo, its loading and unloading at the freight terminal for being transported by any mode becomes a cargo handling service, if it is provided by an independent agency and; (2) the service provider must independently be involved in loading-unloading or packing-unpacking of the cargo. - On reading of the contract, coupled with the statement of Mr. Kailash .....

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J. For the Appellant : Mr. A. K. Sanghi, Sr. Adv. Mr. P. K. Mullick, Adv. Mr. Ajay Kumar, Adv. Mr. B. Krishna Prasad, Adv. For the Respondent : Mr. Kavin Gulati, Sr. Adv. Mr. Praveen Kumar, Adv. Ms. Babita Sant, Adv. ORDER 1. The respondent-assessee herein is the holder of a Certificate of Registration in Form ST2 under Section 69 of the Finance Act, 1994 (hereinafter referred to as, "the Act"). This Certificate was given to him on 29.10.2004 under the category 'Business Auxiliary .....

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On the basis of the statement given by him, the Department took a prima facie view that the contract was for the purpose of packing, loading and unloading etc. of the goods, for which labour was supplied by the respondent to M/s Birla Corporation Ltd. On this basis, a show cause notice was issued to the respondent-assessee alleging that the respondent was a service provider and, by clever means, it was a modus operandi to evade service tax as it was raising two separate bills for the same work i .....

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lia, contending that no services were provided by the respondent by entering into the aforesaid contract, as it was only supplying labour and the labour was not doing any work of packing, unpacking, loading and unloading of any cargo. The High Court, by the impugned Judgment, has accepted the plea of the respondent, resulting into allowing the writ petition and quashing the show cause notice. It is this Judgment of the High Court, the validity of which is questioned by the appellant-Department i .....

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d into between the respondent and M/s Birla Corporation Ltd. and taking into consideration all the averments, which were made in the show cause notice, on the basis of admitted facts, it has come to a conclusion that even when the allegations in the show cause notice are accepted, the said contract does not amount to providing any 'Cargo Handling Service' as defined under Entry 23 of Section 65 of the Act. Therefore, we are of the opinion that the High Court did not commit any mistake or .....

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his Entry reads as under :- " 'Cargo Handling Service' means loading, unloading, packing or unpacking of cargo and includes cargo handling services provided for freight in special containers or for no containerized freight, services provided by a contrainers freight terminal, for all mode of transport and cargo handling service incident to freight, but does not include handling of export cargo or passenger baggage or mere transportation of goods." 6. The High Court, on the inte .....

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ed by an independent agency and; (2) the service provider must independently be involved in loading-unloading or packing-unpacking of the cargo. 7. The aforesaid meaning given by the High Court while interpretating Entry 23 of Section 65 is perfectly in order and justified. On that basis, we have to see whether the twin conditions mentioned therein are satisfied in the present case or not. 8. We find from the record that in the instant case, as per the contract entered into between the responden .....

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he respondent-assessee upto transportation of the cement bags out of the factory. This work was, in fact, been performed by the automatic machines. It is through these automatic machines, the cement bags were loaded, unloaded, packed or unpacked and this included Cargo Handing Services provided for freight in special containers or for non-containerized freight, services provided by a container freight terminal or any other freight terminal, for all modes of transport and cargo handling service i .....

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on to a judgment of the Delhi Bench of the Tribunal in "J & J Enterprises Vs. Commissioner of Central Excise, Raipur," reported in 2006 (3) S.T.R. 655. In this judgment, almost similar services provided by the assessee were held not to be 'Cargo Handling Services'. In arriving at such a conclusion, the Tribunal had referred to the clarificatory instructions, being F.No.B11/1/2002-TRU dated 01.08.2002 and the relevant portion therein was extracted at paragraphs 3 and 15. The .....

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