2014 (8) TMI 228 - AT - Service Tax

Waiver of pre-deposit of Service Tax - Valuation - Cargo Handling Services - inclusion of reimbursement of expenses for the transportation, for execution of oral contract of unloading of coal from the field and transferring the same within the port area and loading in rail wagon - Held that - appellant herein had separately prepared two bills - one for transportation and other for cargo handling service. It is also undisputed that the appellant has discharged the Service Tax liability under the cargo handling service category on the bills which have been raised by him for cargo handling service, while for transportation, he has not discharged Service Tax liability under the category of cargo handling service - reproduced clarification given by the Board that in 2002 itself, the Board has clarified that if the bill amount indicates cargo handling service separately and transportation separately on actuals basis, then the Service Tax liability can be levied on cargo handling service only - At the same time, the Board s circular which has issued in 2002 was correctly followed by the appellant herein, raising separate bills for cargo handling service and transportation - appellant has made out a prima case for waiver of pre-deposit of the amounts on limitation at this juncture - Stay granted.

Summary

Issues Involved:
Discharge of Service Tax liability under Cargo Handling Services, interpretation of Board's Circular on Service Tax liability, question of limitation regarding the period of demand, bifurcation of contract amount for Service Tax liability, application for waiver of pre-deposit.

Analysis:

Discharge of Service Tax liability under Cargo Handling Services:
The appellant filed a Stay Petition seeking waiver of pre-deposit of Service Tax, interest, and penalties under the Finance Act. The issue revolved around the appellant's liability under Cargo Handling Services for transporting coal within a port area. The appellant argued that the amount charged for transportation should not be included in the gross value for Service Tax liability. The appellant relied on a Board's Circular for clarification on deducting transportation costs. The Department contended that the entire contract was for cargo handling services, and the appellant artificially bifurcated the amount to evade Service Tax.

Interpretation of Board's Circular on Service Tax liability:
The Tribunal examined a Board's Circular from 2002, which clarified that if bills indicate cargo handling and transportation charges separately, then Service Tax is leviable only on cargo handling charges. The appellant had followed this circular by raising separate bills for cargo handling and transportation. Both parties' arguments on the merit were considered for final disposal, with the Tribunal acknowledging the appellant's compliance with the circular.

Question of limitation regarding the period of demand:
The Department raised the question of limitation due to the demand period from 2004 to 2006 and the issuance of the Show Cause Notice in 2010. The appellant argued that they followed the Board's circular and issued separate bills, indicating awareness of Service Tax liability. The Tribunal considered the limitation aspect and found that the appellant had a prima facie case for waiver of pre-deposit until the appeal's disposal.

Bifurcation of contract amount for Service Tax liability:
The Department argued that the appellant's bifurcation of the contract amount was illusory to avoid Service Tax liability on the entire contractual amount. They contended that both parties were aware of the Service Tax liability on the entire contract value. However, the Tribunal noted the appellant's compliance with the Board's circular and the separate billing for cargo handling and transportation services.

Application for waiver of pre-deposit:
After considering the submissions and perusing the records, the Tribunal allowed the appellant's application for waiver of pre-deposit of the amounts involved. The recovery was stayed until the appeal's final disposal, recognizing the appellant's compliance with the Board's circular and prima facie case for waiver of pre-deposit on limitation grounds.