2008 (5) TMI 125 - AT - Service Tax

Cargo handling service in respect of loading, unloading and packing, unpacking etc. of the import cargo - applicant submits that they are only a sub-contractor and main contractor Airport Authority of India has paid service tax appellant submit that if they have paid the service tax, then Airport Authority of India was eligible to take the entire amount of tax as credit and the whole thing is Revenue neutral exercise Prima facie a strong case of appellant - stay granted

Summary

Issues:
1. Service Tax liability for cargo handling services provided by the appellant.
2. Interpretation of Board instructions regarding service tax liability of sub-contractors.
3. Granting of waiver for pre-deposit and stay on recovery of the demanded amount pending appeal.

Analysis:
1. The appellant, a sub-contractor for cargo handling services at IGI Airport, New Delhi, was served with a demand for Service Tax amounting to Rs. 1,51,37,923/- for the period from August 2002 to May 2006 by the Commissioner. The appellant argued that they are only a sub-contractor, and the main contract is between the Airport Authority of India (AAI) and the airlines. They contended that the services rendered by them are in the nature of input services to the services provided by AAI to the airlines, falling under the same category. The appellant highlighted that AAI had already paid service tax on the entire amount for cargo handling services, implying a revenue-neutral scenario if they had also paid the tax. The appellant explained that they did not pay the tax due to prevailing Board instructions at that time, which exempted sub-contractors when the main contractor paid the tax.

2. The appellant's reliance on Para 2.4 of Board instructions from 1997 was crucial in their argument. The instruction stated that if services are rendered to a prime consultant, the service tax liability falls on the prime consultant, not the sub-consultant. The appellant contended that their relationship with AAI aligns with this instruction, where AAI is the prime contractor and has already paid the tax. Therefore, the appellant argued that they should not be held liable for the service tax separately. The Tribunal found merit in the appellant's submissions, acknowledging the prima facie validity of the arguments presented by the appellant's Chartered Accountant.

3. After careful consideration of the submissions, the Tribunal, comprising Members M. Veeraiyan and P.K. Das, granted a waiver of pre-deposit of the demanded amount and stayed the recovery pending the appeal's disposal. The Tribunal's decision was based on the acknowledgment of the appellant's position as a sub-contractor and the alignment of their situation with the Board instructions in force during the relevant period. The Tribunal's order aimed to ensure fairness and prevent undue financial burden on the appellant during the pendency of the appeal, reflecting a balanced approach to the matter.

This detailed analysis of the judgment highlights the key arguments, legal interpretations, and the Tribunal's decision regarding the Service Tax liability, interpretation of Board instructions, and the granting of waiver and stay on recovery in the case.