2008 (4) TMI 140 - AT - Service Tax

Services of removing fly ash from thermal power station to cement company shall be liable to tax under category of transport of goods through pipeline but no service tax will be attracted in respect of charges for the services prior to 16-6-05 even if the payment have been received after 16-6-05 - sum of Rs. 22.5 lakh already deposited by the applicant is sufficient for the purpose of hearing the appeal in terms of Section 35F - we waive pre-deposit of balance amount of tax and penalties

Summary

Issues:
Interpretation of service tax liability for operating a fly ash handling system; Application of cum-tax benefit; Pre-deposit requirement for appeal.

Analysis:
The case involved a dispute regarding the service tax liability of an applicant operating a dry fly ash handling system for a thermal power station. The original authority determined that the services provided fell under the category of 'transport of goods through pipeline' services, leading to a demand for service tax and penalties. The applicant contended that they were not involved in transporting the fly ash but only in maintenance and operation of the plant. They had already deposited a sum as per the stay order of the Commissioner (Appeals). The applicant also argued for the application of cum-tax benefit and reduction in the demand and penalties due to certain factors.

The Tribunal considered the submissions from both sides and observed that the services provided could be liable to service tax under the transport of goods through pipeline category. However, they ruled that no service tax would apply to charges for services rendered before the date when service tax came into effect for this particular service. The Tribunal also accepted the argument that the service charges collected should be treated as cum-tax value, leading to a reduction in the demand and penalties. Consequently, the Tribunal held that the amount already deposited was sufficient for the appeal proceedings, and they waived the pre-deposit of the balance amount of tax and penalties, staying the recovery until the appeal's disposal.

In conclusion, the Tribunal granted relief to the applicant by waiving the pre-deposit requirement for the balance amount of tax and penalties, allowing the appeal to proceed without further financial obligations. The decision clarified the service tax liability for the operation of the fly ash handling system and acknowledged the application of cum-tax benefit in determining the tax liability.