2011 (2) TMI 657 - AT - Service Tax

waiver of pre-deposit - GTA services - Board s Circular No. 123/5/2010-TRU, dated 24-5-2010 - applicant is provider of erection, commissioning and installation services in respect of transmission lines and the goods are transported to different sites and Service Tax has been paid on GTA service by the applicant - prima facie, the Service Tax paid on GTA service which is an input service, the applicants are entitled for this credit as provider of taxable service - Board s Circular, which provides that the services provided by the applicant are not taxable and it further clarified that pending disputes are to be settled as per the Board s clarification - Decided in favor of the assessee

Summary

Issues:
1. Application for waiver of pre-deposit of duty, interest, and penalty.
2. Denial of credit in respect of Service Tax paid on input services.
3. Interpretation of contracts with Power Grid Corporation.
4. Entitlement to credit for Service Tax paid on GTA service.
5. Applicability of Board's Circular No. 123/5/2010-TRU.

Analysis:
1. The applicant sought waiver of pre-deposit of duty amounting to Rs. 69,36,450, interest, and penalty, having already paid Rs. 25,00,000. The dispute arose from the denial of credit for Service Tax paid on input services related to the activity of Erection, Commissioning, and Installation of Transmission lines for Power Grid Corporation India Ltd.

2. The applicant contended that they are both service providers and manufacturers, paying taxes accordingly. They claimed credit for Service Tax paid on GTA services as input service, citing their role as providers of commissioning and installation services. Reference was made to Board's Circular No. 123/5/2010-TRU, clarifying that certain activities were not taxable, which the applicant argued should apply to their case.

3. The Revenue argued that the applicant had separate contracts with Power Grid Corporation for the supply of goods and transportation, commissioning, and installation of transmission lines. They emphasized that ownership of goods transferred before installation, thus disqualifying the applicant from claiming credit for GTA service tax. The Revenue also asserted that the circular relied upon by the applicant had prospective application only.

4. The Tribunal acknowledged the applicant's role as a provider of commissioning and installation services for transmission lines, paying Service Tax on GTA services. Considering this, the Tribunal found the Service Tax on GTA service to be an input service eligible for credit. Additionally, the Tribunal noted the Board's Circular exempting certain services from taxation, indicating that the applicant had paid more tax than necessary if their activities were non-taxable.

5. Ultimately, the Tribunal ruled in favor of the applicant, waiving the pre-deposit of the remaining amounts of Service Tax, interest, and penalty. The recovery of the waived amounts was stayed during the appeal's pendency, as the Tribunal found the already deposited sum sufficient for the appeal process. The stay petition was allowed, concluding the judgment in favor of the applicant.