2013 (10) TMI 814 - AT - Service Tax

Whether or not the appellant is required to discharge any service tax on the activities of Salt Harvesting, Salt lifting, salt loosening, salt loading & slat transportation - waiver of pre-deposit - Held that - Salt fields and evaporation area was considered as a factory as per definition given in Sec. 2(j) and the process of evaporation and collection of salt was considered as a process of manufacture as given in sec. 2(f) before 28/02/1986. This aspect whether the stage of salt supplied to M/s. Tata chemicals Ltd. has reached the Stage of marketability or not is required to be gone into detail. Even if this aspect is decided against the appellant then also it has to be decided whether the movement of salt within the factory attracts services Tax liability under Cargo handling Services in view of the judgments relied upon the appellant. No segregation of value of service wise and service tax liability has been provided to the appellant which are required to be provided. It has been held by CESTAT Bangalore in the case of United Telecoms Ltd Vs. Commissioner Service Tax Hyderabad 2010 (10) TMI 730 - CESTAT, BANGALORE that show cause notice should bring out precisely the service tax liability so that appellant could defend the allegations effectively. In view of the above appellant has made out a strong case for complete waiver of the confirmed dues and penalties. Accordingly, there will be a stay against recoveries of these dues till the disposal of the appeal - Stay granted.

Summary

Issues:
1. Whether the appellant is liable to discharge service tax on activities related to salt harvesting, lifting, loosening, loading, and transportation.

Analysis:
The appellant argued that they are engaged in salt manufacturing and raise invoices for various activities related to salt production. They contended that their activities fall within the definition of "manufacture" as per the Central Excises & Salt Act 1944. Additionally, they highlighted that no service tax should be applicable on the movement of materials within the factory premises, citing relevant judgments to support their stance.

The respondent, on the other hand, argued that the appellant's activities do not amount to manufacturing and that segregation of value for taxation purposes is unnecessary due to uniform duty rates for all services.

Upon reviewing the case records, the Tribunal observed that the salt fields and evaporation area were considered a factory before a certain date. The Tribunal noted that the marketability of the salt supplied to M/s. Tata Chemicals Ltd. needed detailed examination. Even if the marketability aspect went against the appellant, the question of service tax liability for movement of salt within the factory under "Cargo Handling Services" needed consideration, supported by previous judgments. The Tribunal emphasized the necessity of providing a breakdown of service-wise value and service tax liability to the appellant, citing relevant precedents for effective defense against allegations.

In light of the arguments presented and the precedents referenced, the Tribunal found merit in the appellant's case for a complete waiver of confirmed dues and penalties. Consequently, a stay was granted against the recovery of dues until the appeal's final disposal.

The judgment was pronounced on 26.07.13 by Mr. H.K. Thakur of the Appellate Tribunal CESTAT AHMEDABAD.