2013 (12) TMI 618 - AT - Service Tax

Demand of service tax - Interest u/s 75 - Penalty u/s 76, 77, 78 - Held that - Prima facie department has treated the expenses involved in handling of D.G. Sets as the value of cargo handling services, while the Tribunal in a series of judgments has held that cargo handling services is in respect of handling of cargo meant for transportation. In view of this, the services demand of Rs. 9.70 lakhs appears to be not sustainable. As regards the demand of Rs. 1.61 lakhs on service of supply of tangible goods, prima facie, we find that this demand also does not appears to be sustainable, as the same is in respect of providing ambulance, cranes, etc. to Moradabad Toll Road Co. (an SPV of NHAI) for insuring road safety - appellant thus have a strong prima facie case in their favour - Stay granted.

Summary

Issues:
1. Demand of service tax and penalty imposed on the appellant for maintenance and repair of roads.
2. Adjudication of the show cause notice by the Commissioner, Central Excise, Delhi.
3. Appeal against the order of the Commissioner along with a stay application.
4. Prima facie assessment of the demand for cargo handling services and supply of tangible goods.
5. Consideration of waiver of pre-deposit of service tax demand, interest, and penalty pending appeal.

Analysis:
The case involved the appellant engaged in maintenance and repair of roads facing a show cause notice for service tax demand, interest, and penalty. The Commissioner, Central Excise, Delhi adjudicated the notice, dropping a portion of the demand but confirming a sum along with penalties. The appeal was filed against this order, accompanied by a stay application. The appellant's representative argued that the demand was related to cargo handling and supply of tangible goods, which the appellant had not provided. They contended that providing services like handling D.G. Sets and supplying motor vehicles, ambulances, and cranes for road safety did not fall under the mentioned categories. The appellant sought a waiver of the pre-deposit for the demand, interest, and penalty pending appeal.

Upon hearing both parties and examining the records, the Tribunal found that the demand was split between cargo handling services and the supply of tangible goods. The Tribunal noted that the expenses related to handling D.G. Sets were not akin to cargo handling services as defined in previous judgments. Additionally, providing services like ambulances and cranes for road safety did not align with the alleged service of supplying tangible goods. Consequently, the Tribunal observed that the appellant had a strong prima facie case in their favor. As a result, the requirement for pre-deposit of the service tax demand, interest, and penalty was waived for the appeal hearing, and the recovery was stayed pending the appeal's disposal. Ultimately, the stay application was allowed in favor of the appellant.