2009 (12) TMI 552 - AT - Service Tax

Waiver of pre-deposit - reversal of Cenvat credit - appellant has already reversed the entire credit taken by them during the proceedings before the adjudicating authority - appellant has not received any consideration or money - What they received is diesel and explosives for the purpose of use in machinery for removal of over-burden using their own capital equipments - provisions of Section 67 may not get attracted in this case, because there is no consideration as such received by the appellant - Rule 5 could be invoked only in case the value of services incurred by the service provider in course of providing taxable services, is borne by service receiver - expenses for services are incurred by the service receiver - Application for waiver of pre-deposit of balance amounts involved is allowed

Summary

Issues:
Stay petition for waiver of pre-deposit of service tax, Cenvat credit, interest, and penalties.

Analysis:
The appellant filed a stay petition seeking a waiver of pre-deposit of significant amounts related to service tax, Cenvat credit, interest, and penalties. The demand was based on two main issues: non-inclusion of the value of free supply materials in the transaction value and ineligibility of Cenvat credit on motor vehicles used for specific services. The Chartered Accountant representing the appellant argued that the Cenvat credit had been reversed, challenging the adjudicating authority's findings on the ineligibility of the Modvat credit. Regarding the service tax liability, the appellant had not included the cost of diesel and explosives supplied by the service receiver in the valuation, contending that these items were for the use of capital equipment and not considered input services. Reference was made to relevant legal provisions and previous judgments supporting the appellant's position.

The Joint Commissioner representing the respondent argued that the reversal of Cenvat credit on capital goods was correct, emphasizing that the activity claimed as 'cargo handling' was inaccurate. It was asserted that the value of diesel and explosives received should be included in the gross value of service charges, as the appellant had collected less charges compared to the inputs supplied. Reference was made to a case involving Northern Coal Fields Ltd. to support this argument.

After considering the submissions from both sides and examining the records, the Tribunal found that the appellant had already reversed the entire Cenvat credit during the proceedings. Regarding the service tax amount, it was noted that the appellant had not received any monetary consideration from the service receiver but had received diesel and explosives for use in machinery. The Tribunal concluded that the provisions of Section 67 might not apply in this scenario due to the lack of consideration received by the appellant. Rule 5 could only be invoked if the service provider's expenses were borne by the service receiver, which was not established in this case. Referring to relevant High Court judgments, the Tribunal ruled in favor of the appellant, allowing the waiver of pre-deposit for the balance amounts and staying the recovery until the appeal was disposed of.