2011 (4) TMI 1152 - AT - Service Tax

Waiver of pre-deposit of Service Tax Held that - Applicant has provided only cranes on hire and this service is in relation to the supply of tangible goods including machinery, equipment and appliances for use, without transferring right of possession and effective control of such machinery, equipment and appliances, and this service comes under the scope of Service Tax with effect from 16-5-2008, Applicant has a strong prima facie case in their favour. Therefore, pre-deposit of the Service Tax, interest and penalties is waived and recovery of the same stayed during pendency of the Appeal. Stay Petition is allowed

Summary

Issues:
Application for waiver of pre-deposit of Service Tax and penalties based on the nature of services provided.

Analysis:
The Applicant filed an Application seeking waiver of pre-deposit of Service Tax amounting to Rs. 1,47,07,296.00 along with penalties. The demand was confirmed due to the Applicant providing business support services. However, the Applicant contended that they were solely offering cranes on a monthly hire basis with operators, a service subject to Service Tax from 16-5-2008, not covering the period of demand from 1-5-2006 to 10-3-2008. The Tribunal found that the Applicant indeed provided cranes on hire, which falls under the scope of Service Tax post 16-5-2008. As the demand pertained to the earlier period, the Applicant had a strong prima facie case in their favor. Consequently, the Tribunal waived the pre-deposit of Service Tax, interest, and penalties, and stayed the recovery during the pendency of the Appeal, thereby allowing the Stay Petition.

This judgment highlights the importance of the nature of services provided in determining the applicability of Service Tax. The Tribunal carefully considered the period in question and the specific service offered by the Applicant, ultimately leading to a decision in favor of the Applicant based on the timeline of when the service became taxable. The waiver of pre-deposit and stay of recovery during the Appeal process demonstrate the Tribunal's recognition of the Applicant's strong case and the need for procedural fairness in tax matters. The decision underscores the significance of clear and accurate classification of services for tax purposes and the impact it can have on tax liabilities and obligations.