2014 (7) TMI 1080 - AT - Service Tax

Waiver of pre deposit - manufacture of goods on Job work basis - Post Job work activity being transportation of goods - Business Support Services - revenue contended raised the demand under the category of Support Services of Business or Commerce (BSS) as the Applicant had handled the goods manufactured on job-work basis in the capacity of a Marketing and Consignment Agent of M/s TSL - Held that - Prima facie the case has been built against the Applicant, as is clear from the impugned notices that the Applicant had received service charges, for rendering post removal activities, from M/s. Tata Steel Ltd., but failed to discharge Service Tax as required, under the category of Business Support Services . There is no merit in the argument of the Revenue that in the said conversion charges, the post removal service charges are already included therefore, the Applicant are required to discharge Service Tax, in addition to the excise duty paid on such converted material, including freight charges. - Spl. Counsel also could not place any evidence to show that the Applicants were though re-imbursed with the freight amount in addition to the conversion charges by M/s TSL, but the same is attributable towards rendering of other post removal service and not transporting of the goods from their factory to the stock yards of M/s TSL. In the result, prima facie, it could be said that the Applicant had not received any service charges in addition to conversion charges and freight charges, at actuals towards the services relating to post removal activities of the job-worked goods manufactured in the factory. Applicant could able to make out a prima facie case for total waiver of pre-deposit of dues adjudged - Stay granted

Summary

Issues:
Waiver of predeposit of service tax and penalty under Sections 77 and 78 of the Finance Act, 1994.

Analysis:
The case involved an application seeking waiver of predeposit of a substantial amount of service tax and penalties imposed on the Applicant. The Applicant was engaged by a company for conversion of raw materials on a job work basis. The Department alleged non-payment of service tax on services rendered by the Applicant as a "Marketing and Consignment Agent." The Applicant contended that they had not received any amount except for conversion charges and freight charges. The Department claimed that the Applicant had received service charges for post-removal activities, which included marketing services, and should have paid service tax under the category of "Business Support Services."

Upon examination, it was found that the Applicant had entered into agreements with the company for providing post-removal services, but the Applicant maintained that they had not received any service charges beyond conversion charges and reimbursement of freight charges. The Tribunal noted that the Department failed to provide evidence that the freight amount reimbursed was for services other than transporting goods. The Tribunal held that the Applicant had not received any service charges in addition to conversion and freight charges for post-removal activities. Consequently, the Tribunal found that the Applicant had made a prima facie case for a total waiver of the dues adjudged. As a result, all dues were waived, and recovery stayed during the pendency of the appeals. The stay petition was allowed, and the judgment was pronounced in open court.