2011 (1) TMI 829 - AT - Service Tax

Waiver of pre-deposit - GTA services - applicants have made out a strong prima facie case for total waiver in the light of their submission prima facie that they were not service receivers since the consignment notes have been drawn against the consignee (consignment agent), that the GTA alone has provided service to the consignment agents and prima facie the consignment agents are liable to pay service tax - Decided in favor of the assessee

Summary

Issues:
1. Waiver of pre-deposit of service tax, interest, and penalty.
2. Inclusion of freight amount in taxable value for service tax.
3. Prima facie case for waiver based on consignment notes and undertakings.

Analysis:
1. The judgment by the Appellate Tribunal CESTAT, CHENNAI involved the issue of waiver of pre-deposit of service tax, interest, and penalty. The tribunal considered the applications for waiver in light of the demands confirmed due to the inclusion of freight amount paid by consignment agents in the taxable value shown in the ST-3 returns filed by the assessees engaged in the manufacture of excisable goods and providing services under "Transportation of Goods by Road" category. The tribunal noted that the applicants made a strong prima facie case for total waiver by demonstrating that they were not service receivers as consignment notes were drawn against the consignee, and the consignment agents were liable to pay service tax. The applicants also provided undertakings showing payment of service tax on lorry freight. Consequently, the tribunal waived the pre-deposit of the amounts in question and stayed the recovery pending appeals.

2. Another significant issue addressed in the judgment was the inclusion of the freight amount in the taxable value for service tax purposes. The demands were confirmed based on this inclusion, leading to the dispute before the tribunal. The tribunal considered the submissions made by both sides and observed that the consignment agents were primarily liable to pay service tax as the service was provided by the Goods Transport Agency (GTA) to the consignment agents. This distinction was crucial in determining the liability for service tax, and the tribunal's decision to waive the pre-deposit was influenced by this analysis.

3. Additionally, the judgment discussed the prima facie case for waiver based on the consignment notes and undertakings provided by the applicants. The tribunal found that the consignment notes being drawn against the consignee, i.e., the consignment agent, indicated that they were the service receivers liable to pay service tax. The submission of undertakings showing payment of service tax on lorry freight further supported the applicants' case for waiver. By considering these factors, the tribunal concluded that the applicants had made out a strong prima facie case justifying the waiver of pre-deposit and the stay of recovery of the disputed amounts.