2006 (8) TMI 615 - AT - Service Tax

Summary

Issues:
1. Applicability of Service Tax on railway siding charges collected by railways on behalf of the appellants.
2. Correctness of demands raised by Revenue on the appellants.
3. Whether amounts not received from railways can be considered taxable.
4. Liability of railways to pay the tax on railway siding charges.

Analysis:
1. The appellants were required to pre-deposit Service Tax and penalty for utilizing port services and authorizing railways to collect railway siding charges. The Revenue added these charges to the assessable value, leading to demands. The appellants contended that they had already discharged Service Tax on these charges. The Tribunal found that until the amounts were received by the appellants, they should not be taxed. Additionally, the legal contention that railways, as the collectors of the charges, should be liable to pay the tax was deemed to have merit.

2. After hearing both sides, the Tribunal considered whether the approvals shown in the balance sheet were subject to Service Tax and if the railway siding charges constituted a taxable service. Since the appellants had not actually received these amounts, the Tribunal concluded that taxing them prematurely was inappropriate. Moreover, the argument that the railways, as the entities collecting the charges, should bear the tax liability was found to have legal merit.

3. The Tribunal acknowledged that the demands raised by the Revenue were based on accrual amounts, i.e., those not yet received from the railways. It was determined that such amounts should not be considered taxable until actually received by the appellants. The Tribunal granted a waiver of pre-deposit and stayed the recovery of the demanded amounts until the appeal was disposed of, recognizing the legal validity of the argument that the railways, as the collectors of the charges, should be responsible for paying the tax.

4. In conclusion, the Tribunal allowed the stay application, waiving the pre-deposit requirement and halting the recovery of the demanded amounts until the appeal was finalized. The legal contention that the railways, as the entities collecting the railway siding charges, should bear the tax liability was upheld, indicating the merit in this argument and the need for further consideration during the appeal process.