2013 (7) TMI 180 - AT - Service Tax

Business support services appellant was installing the machinery for evacuation of cement and the storage silos for its storage service tax demanded as administrative charge - Held that - The activity of the appellant cannot be termed as business support service - Commissioner himself has held that the transaction is not a service but is sale of fly ash on which central excise duty was being paid - same activity cannot be termed as sale as well as service - the appellant have provided their land, approach roads and also the use of their weighbridge, water etc. to enable the cement companies to install their machinery for evacuation of the fly ash from the thermal power plant and its storage. - prima facie case is in favor of applicant - stay granted.

Issues: Service tax liability on "administrative charges" received by a thermal power station from cement companies for providing land and facilities for fly ash disposal.

Analysis:
The appellant, a thermal power station, generated fly ash during power generation and entered agreements with cement companies for fly ash removal. The agreements involved the appellant providing land, approach roads, and other facilities to the cement companies for installing machinery and storage silos. The cement companies paid "administrative charges" to the appellant, which the department viewed as business support service, leading to service tax demands, interest, and penalties totaling Rs. 5,72,89,326/-. The Commissioner confirmed the demands, but a subsequent show cause notice for the period post 1/3/11 was dropped, as it was considered a sale of fly ash subject to excise duty. The appellant argued that providing land and facilities did not constitute a service, especially since the Commissioner had ruled similarly for the later period. The appellant sought waiver of pre-deposit and stay on recovery pending appeal.

The appellant contended that the charges were sale price, not for business support service, as they only provided land and roads for cement companies' use. They highlighted the Commissioner's decision post 1/3/11, where the transaction was deemed a sale, not a service. The appellant argued for a prima facie case, requesting waiver of pre-deposit and stay on recovery during the appeal. The department opposed, asserting that providing land and facilities constituted business support service, thus attracting service tax on the "administrative charges."

Upon considering both parties' submissions, the Tribunal found that the appellant's provision of land, roads, and additional facilities for fly ash disposal did not amount to business support service. The Tribunal noted that the Commissioner's ruling for the later period classified the transaction as a sale, not a service, indicating inconsistency in treatment. Therefore, the Tribunal held that the appellant had a prima facie case in their favor. Consequently, the requirement of pre-deposit for service tax demand, interest, and penalty was waived, and recovery was stayed pending appeal. The stay application was granted, allowing the appeal to proceed without immediate payment obligations.

In conclusion, the Tribunal's decision favored the appellant by recognizing that the activities related to providing land and facilities for fly ash disposal did not constitute business support service subject to service tax. The Tribunal emphasized the inconsistency in treatment by the Commissioner for the later period, supporting the appellant's argument for a prima facie case. As a result, the Tribunal waived the pre-deposit requirement and stayed recovery pending the appeal's disposal, providing relief to the appellant in the matter of service tax liability on the "administrative charges" received from cement companies.

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