2009 (9) TMI 722 - AT - Service Tax

Summary

Issues Involved:
Entitlement to input credit towards Service Tax on coal handling charges of GTA services while discharging Service Tax liability for services provided under a specific agreement.

Detailed Analysis:

Issue 1: Entitlement to Input Credit
The primary issue in this appeal revolved around the entitlement of the appellant to the input credit towards Service Tax on coal handling charges of GTA services while discharging Service Tax liability for services provided under an agreement dated 1-10-04. The appellant argued that as an independent contractor operating and maintaining a power project, coal and transport services were essential for power generation, making the service tax paid on these inputs eligible for Cenvat credit. The appellant contended that coal was indispensable for the thermal power project, and the transport service bringing coal was inseparable, justifying the claim for input credit.

Analysis: The Tribunal examined the terms of the contract between the appellant and Hindustan Zinc Ltd., emphasizing the requirement for the appellant to operate and maintain the power project, including the generation of electricity for captive consumption. The Tribunal noted that the operation and repair maintenance contract for the power project, as evidenced by Article 3.1.2 of the contract document, indicated that the appellant was involved in operating the plant as well. The Tribunal acknowledged the essential nature of coal for power generation and observed that coal handling and delivery were intricately linked to power generation. Additionally, the Tribunal recognized that transport services were inseparable from the process. Consequently, the Tribunal found prima facie merit in the appellant's argument regarding the entitlement to input credit due to the indispensability of coal and transport services for power generation.

Decision: Considering the interconnection between coal handling, transport services, and power generation, the Tribunal stayed the realization of the demand raised by the impugned order during the pendency of the appeal. The Tribunal emphasized the need for a thorough examination of evidence, which could be addressed in the regular appeal hearing. Therefore, the Tribunal ordered that the pre-deposit be dispensed with during the appeal process to facilitate a comprehensive review of the matter.

This detailed analysis highlights the key arguments, considerations, and the Tribunal's decision regarding the entitlement to input credit for Service Tax on coal handling charges of GTA services in the context of the specific agreement and the nature of the services provided by the appellant.