2009 (7) TMI 446 - AT - Service Tax

Service tax confirmed on the ground that the applicants who are a Govt. of Tamil Nadu undertaking engaged in the generation of electricity during the course of which fly ash emerges as a by-product were rendering services of business support by supplying fly ash to cement and asbestos manufacturers and others and collecting charges of Rs. 60/- per MT on fly ash from cement manufacturing companies and asbestos manufacturing companies.- Prima facie Business Support Services not rendered - The fact that the cement manufacturers and asbestos manufacturers are paying procurement tax is not prima facie sufficient to hold that the tax that the purchasers of the fly ash are paying sales tax so as to enable the applicants to argue that they are not rendering any taxable service. they were under a bona fide belief that they were not liable to pay service tax. Suppression absent - We therefore accept that prima facie part of the demand is barred by limitation stay granted partly

Summary

Issues:
Application for waiver of pre-deposit of service tax; Rendering of business support services; Applicability of extended period of limitation; Financial hardship plea; Compliance reporting and early hearing application.

Analysis:
The judgment deals with an application for waiver of pre-deposit of service tax amounting to Rs. 1,42,29,961 confirmed on the grounds that the applicants, a Govt. of Tamil Nadu undertaking engaged in electricity generation, were providing business support services by supplying fly ash to cement and asbestos manufacturers and collecting charges for the same. The Tribunal observed that the service charge collected for fly ash disposal was for facilities provided by the applicants to their customers, not for taxable services. The Tribunal also noted that the extended period of limitation was not applicable as the applicants had a bona fide belief that they were not liable to pay service tax, which does not co-exist with suppression. A part of the demand was found to be barred by limitation, and considering the financial hardship plea, the Tribunal directed a pre-deposit of Rs. 25,00,000 within eight weeks, with the balance amount waived pending the appeal.

The Tribunal emphasized the importance of compliance by setting a reporting deadline of 17-9-2009 and directed an early hearing application to be listed on the same date as the compliance report. Failure to comply with the pre-deposit directive would result in the vacation of stay and dismissal of the appeal without prior notice. The judgment provides a detailed analysis of the issues raised, including the nature of services provided, the applicability of the extended period of limitation, considerations for financial hardship, and the importance of timely compliance with the tribunal's directives to ensure the continuation of the appeal process.