2014 (12) TMI 242 - AT - Service Tax

Waiver of pre deposit - Classification of service - Clearing and forwarding agency service - GTA Service - Held that - Appellant does not undertake any of activities clarified by Board s Circular No. B-43/7/97-TRU, dated 11-7-1997 to be a C&F Agent service and therefore, there is merit in the contention of the appellant that the activity does not come within the purview of clearing and forwarding agency service as proposed by the department. In the Sendoz Impex Ltd. 2011 (4) TMI 1151 - CESTAT, KOLKATA case and Karam Chand Thappar & Bros (Coal Sales) Ltd. case (2010 (4) TMI 452 - CESTAT, KOLKATA) a similar view was taken by the Tribunal on the question whether transportation of coal from colliery to customers premises by arranging for the transportation through rail would amount to clearing and forwarding agency service or not and it was held that the same would not be classifiable under clearing and forwarding agency service . Appellant has made out a strong case in their favour for grant of stay against the dues adjudged in respect of clearing and forwarding agency service . - In any case, the appellant has discharged Service Tax on the consideration received under the category of GTA service on 25% value of the service. As regards the demand under GTA service, the appellant has already discharged a sum of about ₹ 77 lakhs as against the demand of ₹ 94 lakhs approximately - Stay granted.

Summary

Issues:
Classification of services under Goods Transport Agency, Business Auxiliary, and Clearing & Forwarding services; Abatement on service value; Short payment of Service Tax; Classification under clearing and forwarding agency service; Demand of Service Tax; Interest, penalties, and late fee imposition; Prima facie classification under Section 65A of the Finance Act, 1994; Essential character of service; Board's Circular interpretation; Comparison with previous Tribunal decisions.

Classification of Services under Goods Transport Agency, Business Auxiliary, and Clearing & Forwarding Services:
The appellant, registered for Service Tax purposes under various categories, entered into a contract for a composite service involving lifting, transportation, and supervision of coal beneficiation. The department contended that the service should be classified under "clearing and forwarding service" without abatement. The appellant argued that transportation was the essential service, not clearing and forwarding, and had paid Service Tax accordingly.

Short Payment of Service Tax and Demand:
A show cause notice demanded Service Tax for short payments during multiple years. The department proposed a substantial amount under Section 73(1) of the Finance Act, 1994, along with interest, penalties, and late fees. The impugned order confirmed the demands, leading to the appeal.

Prima Facie Classification under Section 65A and Essential Character of Service:
The Tribunal analyzed the terms of the contract to determine the essential character of the service. Section 65A of the Finance Act, 1994 guided the classification process for composite services. It was found that transportation was the primary service, with supervision being ancillary. The Board's Circular and previous Tribunal decisions supported the appellant's contention.

Interest, Penalties, and Late Fee Imposition:
The impugned order imposed significant penalties and late fees, which the appellant contested based on the nature of the services provided and the payment already made. The Revenue relied on previous decisions, which were found to be based on overruled cases.

Decision and Grant of Stay:
The Tribunal, after considering the arguments and legal provisions, granted a waiver from pre-deposit and stayed the recovery of the balance of dues during the appeal's pendency. The appellant's strong case for stay against the demands related to clearing and forwarding agency service was acknowledged, along with the partial payment made for GTA service.

This detailed analysis of the legal judgment highlights the key issues, arguments presented by both parties, relevant legal provisions, and the Tribunal's decision in granting a stay against the demands.