2011 (9) TMI 823 - AT - Service Tax

Waiver of pre-deposit applicant procures sugar cane from the fields of cane growers - applicant has collected freight charges from the cane growers demand of service tax Held that - amounts paid to the transporters by the applicant were on behalf of the cane growers. The records including show-cause notice, order-in-original and order-in-appeal do not indicate as to the persons on whom freight bills, if any, were raised. applicant has recovered the freight charges paid on behalf of the cane growers, no demand is sustainable on the applicant. waiver of pre-deposit allowed

Summary

Issues:
Service tax liability on freight charges collected by the applicant from cane growers.

Analysis:
The case involves a dispute regarding the service tax liability on freight charges collected by the applicant from cane growers. The original authority confirmed a service tax amount along with penalties, which was upheld by the Commissioner (Appeals). However, the penalty under Section 76 was waived by the Commissioner (Appeals) invoking the provisions of Section 80 of the Finance Act, 1994.

The applicant argued that the payment of freight to transporters was on behalf of the cane growers, who availed the services of GTA for transporting cane from fields to the applicant's factory. The advocate highlighted that the show-cause notice and the original authority's findings supported the fact that the freight charges were paid by the applicant on behalf of the cane growers, indicating that no service tax should be payable by the applicant.

The Jt. CDR reiterated the findings and reasoning of the Commissioner (Appeals) in support of the service tax liability on the freight charges collected by the applicant. However, upon perusal of the records, it was observed that the amounts paid to the transporters were indeed on behalf of the cane growers. The lack of information regarding the persons on whom freight bills were raised, coupled with the original authority's findings, led to the conclusion that no demand was sustainable on the applicant.

In light of the above analysis, the Tribunal decided to waive the pre-deposit of the dues as per the impugned order and stayed the recovery thereof until the appeal was disposed of. The judgment was pronounced and dictated in the open court by M Veeraiyan, J.