2014 (2) TMI 576 - AT - Service Tax

Demand of service tax - Tax not paid for GTA service - Held that - So far as the activity of processing logs for making veneer for the clients, since veneer is an excisable product classifiable under 48.12, the process would amount of manufacture and hence, we are of the prima facie view that same cannot be considered as service of production of goods not amounting to manufacture. Thus the service tax demand of Rs.1,45,660 does not appear to be sustainable. However, as regards the service tax demand of Rs.71,583 in respect of GTA service recipient, we are of the prima facie view that appellant would be liable to pay the same - appellants are directed to deposit an amount of Rs.17,583 within a period of 4 weeks. Compliance to be reported on 29.4.2013. On deposit of the this amount within a stipulated period, the requirement of pre-deposit of balance amount of Service Tax demand, interest thereon and penalty shall stand waived and its recovery thereof shall stand stayed during the pendency of the appeal - Decided against assessee.

Summary

Issues: Allegation of providing business auxiliary service and non-payment of service tax for GTA services.

Analysis:

1. The appellant, a manufacturer of plywood, was alleged to have provided business auxiliary services by processing logs for making veneers for their client during a specific period. A service tax demand of Rs.1,45,660/- was imposed based on this allegation. Additionally, it was claimed that the appellant received GTA services during another period but did not pay the service tax amounting to Rs.17,583/-. The Assistant Commissioner confirmed the service tax demand along with interest and penalties under relevant sections of the Finance Act, 1994.

2. The appeal to the Commissioner (Appeals) against the order confirming the service tax demand was dismissed, leading to the filing of the current appeal along with a stay application. The Tribunal heard both sides regarding the stay petition.

3. After considering the submissions, the Tribunal found that processing logs to make veneers, which are excisable products, amounts to manufacturing and cannot be considered a service of production of goods not amounting to manufacture. Therefore, the service tax demand of Rs.1,45,660/- in this regard was deemed unsustainable. However, concerning the service tax demand of Rs.71,583/- for GTA services, the Tribunal held that the appellant would be liable to pay the same.

4. As a result of the analysis, the appellants were directed to deposit Rs.17,583/- within four weeks. Upon compliance, the pre-deposit requirement for the balance amount of service tax demand, interest, and penalty would be waived, and the recovery thereof stayed during the appeal's pendency. The decision was pronounced in open court.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved, the Tribunal's findings, and the directions given to the appellants regarding the service tax demands related to business auxiliary services and GTA services.