2014 (8) TMI 670 - AT - Service Tax

Demand of service tax - Classification of service - Manpower Recruitment and Supply Agency s Services or Cargo Handling Services - Held that - There is a dispute in the classification of the service, can be decided only at the time of final hearing. Prima facie, we see merit in the argument of the applicants. In view of this observation, the applicants have made out a case of waiver of pre-deposit, as they are discharging their Service Tax liability under the category of Manpower Recruitment and Supply Agency s Services . Accordingly, waiver of pre-deposit of the entire amount of Service Tax, interest and penalty is granted and we stay recovery thereof during the pendency of the appeal - Stay granted.

Summary

Issues: Classification of services for Service Tax liability waiver of pre-deposit.

Classification of Services:
The judgment revolves around the classification of services provided by the applicants for the purpose of Service Tax liability. The applicants are engaged in providing "Material Handling Services" to a specific service recipient. While the applicants classify the service under "Manpower Recruitment and Supply Agency's Services," the Revenue argues for classification under "Cargo Handling Services" due to the payment structure based on per ton basis. The Tribunal notes the dispute in classification and decides that the final determination can only be made during the final hearing. However, prima facie, the Tribunal finds merit in the applicants' argument, leading to the grant of waiver of pre-deposit of the entire amount of Service Tax, interest, and penalty. The Tribunal stays the recovery of the said amounts during the pendency of the appeal.

Waiver of Pre-Deposit:
The issue of waiver of pre-deposit arises in the context of the Service Tax liability dispute. The Tribunal, after hearing both sides and examining their submissions, acknowledges the existence of a classification dispute that can only be conclusively resolved at the final hearing. Despite this, the Tribunal finds merit in the applicants' argument regarding the current classification under "Manpower Recruitment and Supply Agency's Services." Consequently, the Tribunal grants the applicants' request for a waiver of pre-deposit concerning the entire amount of Service Tax, interest, and penalty. The Tribunal orders the registry to link the appeal with the current file, emphasizing the directive for waiver of pre-deposit and the stay on recovery during the appeal process.

In conclusion, the judgment by the Appellate Tribunal CESTAT Chennai addresses the crucial issues of the classification of services for Service Tax liability and the subsequent waiver of pre-deposit. The Tribunal recognizes the dispute in classification between the applicants and the Revenue, granting a waiver of pre-deposit based on the prima facie merit found in the applicants' argument. The decision highlights the importance of a final determination during the conclusive hearing while ensuring the protection of the applicants from immediate recovery actions during the appeal process.