2011 (7) TMI 826 - AT - Service Tax

Waiver of pre-deposit - Business Auxiliary Service - applicants are not paying Service Tax on the amount of Rs. 30/- PMT received from the BALCO on the belief that some part of the activity undertaken by the applicants are not taxable - The contention of the applicants is that the contract is for crushing coal and this activity is not covered under the scope of Business Auxiliary Service during the period in dispute i.e. Sept. 2004 to June 2005 - Full stay granted.

Summary

Issues:
1. Waiver of pre-deposit of Service Tax, interest, and penalties.
2. Tax liability on the transportation and crushing of coal activities.
3. Interpretation of Business Auxiliary Service during the relevant period.

Analysis:
1. The applicant sought a waiver of pre-deposit of Service Tax, interest, and penalties amounting to Rs. 41,75,688/-, contending that they were providing Business Auxiliary Service. The demand was confirmed based on their agreement with BALCO for transportation, coal crushing, and conveying. While they paid tax on Rs. 145/- PMT, they did not on the remaining Rs. 30/- PMT, believing it was not taxable. The Revenue argued that tax should be paid on the entire Rs. 175/- PMT received. The Tribunal found that crushing coal did not constitute production for the client during the disputed period, supporting the applicant's case for waiver.

2. The Revenue's position was that since the applicant paid duty on the amount received from BALCO, they were liable for tax on the full amount. However, the applicant argued that crushing coal did not fall under Business Auxiliary Service during the relevant period (Sept. 2004 to June 2005) as it did not amount to production for the client. The Tribunal agreed with the applicant, stating that the activity was not on behalf of the client and, therefore, the Service Tax liability was not applicable.

3. The Tribunal determined that the crushing of coal by the applicant did not constitute production on behalf of the clients during the disputed period. Consequently, the Tribunal found a strong case for waiving the Service Tax, interest, and penalty. As a result, the pre-deposit was waived, and recovery was stayed during the appeal's pendency. The Tribunal allowed the stay petition, indicating a favorable decision for the applicant in this matter.