SC order on Cargo Handling Service

In an appeal filed by M/s Signode India Ltd., a bench of Suprene Court comprising of Justice Ranjan Gogoi and Justice Navin Sinha held that ‘packaging activity’ at the stage before removal of goods from factory cannot be treated as “Cargo Handling Service”. And service tax cannot be levied on such activity. They were of the view that appellant has nothing to do with the transportation of the goods which was packed in the principal manufacturer’s unit i.e. Tata Refractories Ltd. The bench took note of the amendment of Finance Act,2005 with insertion of Sec.65(76b) and 56(105)(zzzf) and said “The above amendment, to our mind, is sufficiently indicative of legislative intent that packaging activity is different from cargo handling activity. A view, which would make the appellant liable to tax for the pre-amended period (prior to 16.06.2005) on the basis that the activity undertaken by it involves rendering of cargo handling service would run counter to the expressed legislative intention in a situation where its liability, for the post amendment period, on the basis that the appellant is engaged in “packaging activity” has not been disputed by the Revenue.”
The bench added ‘It is nobody’s case before us that the appellant is a cargo handling agency. All activity undertaken by the appellant, though related to packing activity, is at a stage when the goods are yet to clear the factory gate as manufactured goods for onward transportation.” “In the light of the discussions that have preceded, we are of the view that prior to the amendment made by the Finance Act of 2005 with effect from 16.06.2005, the appellant would not be liable to pay service tax on the service rendered by it in terms of Section 65(23) read with Section 105(zr) of the Act,”


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