2005 (5) TMI 487 - AT - Central Excise

Summary

Issues:
1. Liability to pay service tax on freight charges for delivery of transformers.
2. Interpretation of Section 112(a)(iii) of the Service Tax Act.
3. Determination of whether the appellants are agents for transportation of goods.

Analysis:
1. The primary issue in this case revolves around the liability to pay service tax on freight charges for the delivery of transformers. The appellants, who are manufacturers of transformers, argued that they are not liable to pay service tax on the freight charges as it is paid by the purchasers, not by them. The department, however, contended that the appellants should be considered as agents for the transportation of goods and thus liable to pay the service tax on the freight charges.

2. The interpretation of Section 112(a)(iii) of the Service Tax Act was crucial in determining the liability of the appellants. The section states that the person who pays freight for the transportation of goods by road in a goods carriage is liable to pay service tax. The appellants argued that they do not fall under this provision as they are manufacturers and suppliers of transformers, not agents for transportation. The Commissioner had held them to be agents, a decision which the appellants contested.

3. Upon hearing both sides, the Tribunal found merit in the appellants' submission that they are manufacturers and suppliers of transformers, not agents for transportation. The Tribunal noted that the appellants did not act as agents for the transportation of goods by road in a goods carriage as per the provisions of Section 112(a)(iii) of the Act. Consequently, the Tribunal allowed the stay application unconditionally, granting a waiver of pre-deposit and staying the recovery of the service tax until the appeal is disposed of. This decision was based on the strong prima facie case presented by the appellants, indicating that they are not liable to pay the service tax on the freight charges for the delivery of transformers.

This detailed analysis of the judgment highlights the key issues of liability for service tax on freight charges, the interpretation of relevant statutory provisions, and the determination of the appellants' role as manufacturers or agents for transportation of goods.