2007 (2) TMI 638 - AT - Service Tax

Summary

Issues involved: Pre-deposit of service tax amount along with penalty, liability of sub-contractor for service tax on stevedoring activity, waiver of pre-deposit, direction to main contractor regarding payment of service tax.

Pre-deposit of service tax amount: The appellants, providing service under C & F Agents Service, were also involved in the activity of stevedoring as a sub-contractor. Despite the main contractor having already discharged the service tax on this activity, the Department proceeded to recover the service tax from the appellants. The appellants contested this requirement of pre-depositing the service tax amount of Rs. 20,69,269/- along with penalty.

Liability of sub-contractor for service tax on stevedoring activity: The Tribunal observed that the main contractor had already paid the service tax on the stevedoring activity. Referring to relevant Tribunal rulings and a Trade Notice, it was concluded that the sub-contractor, in this case, the appellants, was not liable to discharge any service tax on the same activity. Therefore, the appellants were granted a waiver of pre-deposit based on the strong merits of their case as per the cited judgment and Circular.

Waiver of pre-deposit and direction to main contractor: The Tribunal allowed the stay application by granting a waiver of pre-deposit of the amount and staying its recovery until the appeal's disposal. Additionally, the Tribunal directed that the Revenue should not prevent the main contractor from making payment to the appellants in terms of the contract. The matter was scheduled for final hearing on 28th March 2007, with the Commissioner instructed to file a counter to the 'Grounds of the Appeal'.

Direction to main contractor regarding payment of service tax: The Assistant Commissioner had directed the main contractor not to make any payment of service tax to the appellants. However, considering that the appellants had been granted a full waiver of pre-deposit, the Tribunal granted consequential relief by allowing the main contractor to make payments to the appellants as per the contract terms. The matter was set to be heard finally on 28th March 2007.