2011 (2) TMI 506 - AT - Service Tax

wavier of pre-deposit - GTA service - show cause notice was issued for demand of service tax, interest and penalty and the same was confirmed by both the authorities below - as per the provisions of Finance Act, 1994, under the category of business auxiliary service, the liability to pay service tax is on the service provider and not on the service recipient - applicants have made out a strong prima facie case in their favour

Summary

Issues:
1. Waiver of pre-deposit of service tax demand, interest, and penalty for manufacturer of sugar availing services.
2. Dispute regarding payment of service tax on handling charges of molasses.
3. Interpretation of liability under business auxiliary service category of Finance Act, 1994.

Analysis:
1. The case involves the applicants, who are sugar manufacturers, seeking a waiver of pre-deposit of service tax demand, interest, and penalty confirmed against them. The applicants procure sugarcane/molasses by availing services from another party for transportation and handling. While they discharge their service tax liability for transportation as service recipients, a dispute arises regarding the payment of service tax on handling charges of molasses. A show cause notice was issued, and the demand was confirmed by authorities, leading the applicants to appeal for relief.

2. The applicants argue that they pay handling charges separately for the activity of procuring and storing molasses before transport to their factory. They contend that they are not liable to pay service tax on handling charges as service recipients. Instead, any service tax liability for handling charges should be on the service provider, not the recipient. The applicants request a waiver of the entire demand until the appeal's final disposal.

3. Upon hearing the submissions, the Tribunal considers the provisions of the Finance Act, 1994, specifically regarding business auxiliary services. It is noted that the liability to pay service tax falls on the service provider, not the recipient, under this category. As the applicants are service recipients, the Tribunal agrees with the argument presented by the applicants' consultant. Consequently, the Tribunal finds a strong prima facie case in favor of the applicants and grants a waiver of the entire service tax demand, interest, and penalty, allowing a stay on the demand during the appeal's pendency. The order is dictated and pronounced in open court, providing relief to the applicants based on the interpretation of the relevant legal provisions.