2007 (6) TMI 575 - AT - Service Tax

Summary

Issues involved: Interpretation of "Cargo Handling Service" under Section 65 of the Finance Act, 1994; Liability of sub-contractors to pay Service Tax.

Interpretation of "Cargo Handling Service": The appellants were demanded Service tax for allegedly not paying Service Tax on "Cargo Handling Service" provided to customers of another company. The appellants argued that the service provided was purely transportation of cargo, not "handling" as defined under Section 65 of the Finance Act, 1994. They also claimed that as sub-contractors, they were not liable to pay Service Tax. The Tribunal found a prima facie case for the appellants, noting that sub-contractors are not liable to pay Service Tax as per a Board Circular and previous Tribunal decisions.

Liability of sub-contractors to pay Service Tax: The Tribunal considered the submissions and found in favor of the appellants, stating that they were rendering a service on behalf of the principal contractor to the customer. The Tribunal referenced a Board Circular from 1998 and previous Tribunal decisions to support the conclusion that sub-contractors are not liable to pay Service Tax. As a result, the Tribunal ordered a waiver of pre-deposit and stay of recovery for the tax and penalty amounts.