2011 (5) TMI 806 - AT - Service Tax

Waiver of pre-deposit - cargo handling services - service of loading and unloading of drum in their factory premises and the services of business auxiliary for performance of export goods - agreement shows that a contract sharing export incentive between them, received by the exporter with the appellant, for the purpose they charges at the rate of 3.25 of FOB value Held that - cannot be charged under the category of business auxiliary more so for exporting and for promoting the services of sale of products. As regards the cargo handling services, it is not disputed that appellants herein is a manufacturer and as per the terms and conditions of sale and purchase of goods, he loads the consignment in his factory premises for further dispatch to the purchaser. Prima facie this activity also may not fall under the category of cargo handling services, waiver of pre-deposit allowed

Summary

Issues:
1. Waiver of pre-deposit of Service Tax and penalties under different categories.

Analysis:
The appellant filed a stay petition seeking a waiver of pre-deposit of Service Tax amounting to Rs. 69,057 under cargo handling services and Rs. 6,35,000 under business auxiliary services, along with penalties and interest. The adjudicating authority and Commissioner (Appeals) confirmed these amounts based on the appellant's provision of cargo handling and business auxiliary services. However, upon reviewing the agreement presented, the Tribunal observed that the agreement primarily pertained to the sale of goods for export, sharing export incentives, and promoting product sales. The Tribunal noted that the activities described in the agreement did not align with the categorization of business auxiliary services or cargo handling services as contended by the authorities.

The Tribunal found that the appellant, a manufacturer, loaded consignments in their factory premises for dispatch to purchasers, which did not strictly fall under the definition of cargo handling services. Similarly, the activities related to export incentives and product sales promotion did not squarely fit within the scope of business auxiliary services. Consequently, the Tribunal held that the appellant had established a prima facie case for the waiver of pre-deposit of the disputed amounts. Therefore, the Tribunal allowed the application for waiver and stayed the recovery of the amounts until the appeal's final disposal.