2008 (6) TMI 37 - AT - Service Tax

Allegation against the appellants is that they were carrying on the services of C&F and cargo handling services besides stevedoring services and port services - appellant s contention is that the main contractor (CHA) was discharging service tax on their behalf - impugned order with regard to the demand of service tax on the appellants in respect of cargo handling service and confirmation of interest and penal liabilities is not sustainable assessee s appeal is allowed

Summary

Issues:
Service tax liability on port services and cargo handling services for a specific period; Penalties under various provisions of Finance Act; Allegation of carrying out C&F, cargo handling, stevedoring, and port services; Dispute over liability to discharge service tax; Applicability of Cenvat credit; Comparison with previous favorable judgment; Rejection of plea by Commissioner; Opposition by SDR; Settlement of the issue in favor of the appellant in the earlier period; Rejection of the plea by the Commissioner; Negligence of jurisdictional authorities in verifying facts; Allowance of appeal with consequential relief.

Analysis:
The appeals dealt with the imposition of service tax on port services and cargo handling services for a specific period, along with penalties under various Finance Act provisions. The appellants were accused of providing C&F, cargo handling, stevedoring, and port services at different ports. The Commissioner rejected the appellants' claim that their main contractor discharged the service tax on their behalf, citing lack of proof. The appellants argued that a previous favorable judgment in their own case should apply, supported by various legal precedents. The SDR opposed the appeal, highlighting the Commissioner's grounds for rejecting the appellants' plea.

The Tribunal carefully considered the submissions, including the previous judgment and legal precedents cited. Referring to the earlier period's settlement in the appellant's favor, the Tribunal reproduced relevant findings from the previous order. The previous order highlighted the appellants' communication regarding sub-contracting and service tax payment by their principals. It referenced a trade notice exempting sub-contractors from service tax if the main contractor paid. The Tribunal emphasized that the appellants informed the department about their principals paying service tax, questioning the department's failure to verify facts. The Tribunal concluded that the issue had been resolved in the appellant's favor in the previous case, and as there was no stay on that order, the current appeals were allowed with consequential relief.

In summary, the Tribunal found in favor of the appellant based on the previous settlement in their own case and relevant legal precedents. The Commissioner's rejection of the appellant's plea was deemed unsustainable due to negligence in verifying facts and failure to follow departmental circulars. The Tribunal upheld the appellants' contention that their main contractor discharged the service tax, leading to the allowance of the appeals with consequential relief.