R S And Brothers Vs Commissioner (CESTAT Allahabad)
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Allahabad, adjudicated an appeal challenging confirmation of service tax demand of ₹7,79,168 along with interest and penalties, arising from discrepancies between Form 26AS and ST-3 returns for the period 2014–15 to 2016–17. The demand was raised based on data received from the Income Tax Department and alleged short payment of service tax.
The appellant contended that the differential amounts related to “Manpower Recruitment/Supply Agency Services” provided to a corporate entity, where liability to pay service tax rested on the service recipient under the reverse charge mechanism as per Notification No. 30/2012-ST, as amended. It was argued that the department incorrectly classified the services as “Cargo Handling Services.”
The Tribunal examined the work order, which required deployment of ex-railway staff for rake movement, including ensuring adequate manpower and supervision. It found that the nature of the contract clearly involved deployment of personnel and therefore fell within “Manpower Recruitment/Supply Agency Services.” It held that there was no basis to classify such services as “Cargo Handling Services,” which require activities like loading, unloading, and handling of cargo by specialized agencies.
The Tribunal also noted that the show cause notice relied on pre-2012 provisions, whereas the negative list regime introduced from 01.07.2012 was applicable. It observed that the demand was confirmed without reference to the correct charging provisions and without examining exemptions, reverse charge applicability, or actual taxable value.
