2013 (8) TMI 858 - AT - Service Tax

Supply of Tangible Goods - Department treated the Service provided by the assessee into the category of supply of tangible goods - Held that - Prima facie it cannot be concluded that it had completely gone to Port Trust - the payment of VAT alone cannot be a conclusive evidence as to whether the appellant rendered the SOTG service or not - The tug had been hired on a monthly basis and the calculation of the number of days on which the tug was used is made by deducting 24 hours for maintenance which is to be accumulated on a monthly basis and after availing more than 24 hours the Trust can deduct proportionate amount - MPT was not liable to third party because of the use of tug on the contract and the contractor was required to take third party liability insurance - The points as urged by the learned AR create a doubt about the case of the appellant in their favour. Waiver of Pre-deposit Prima facie assessee was not able to made out a prima facie case in their favour - having regard to the fact that the amount involved in respect of the normal period is only Rs.44 lakhs only Rs.10 lakhs would be sufficient for the purpose after such submission rest of the duty to be waived till the disposal of the case Conditional stay granted.

Issues:
1. Whether the supply of tug by the appellant to M/s. Murmagao Port Trust constitutes a service under the category of supply of tangible goods (SOTG)?
2. Whether the payment of VAT alone can be conclusive evidence to determine the liability for service tax in such cases?
3. Whether the effective control and right of possession were transferred in the tug supply agreement?
4. Whether the decisions cited by both parties are applicable to the present case?
5. What is the final decision regarding the liability for service tax and the amount to be deposited by the appellant?

Analysis:
1. The appellant provided a tug to M/s. Murmagao Port Trust, and proceedings were initiated to demand service tax based on the supply of tangible goods. The original adjudicating authority dropped the demands citing VAT payment by the appellant. However, the Commissioner(Appeals) held that payment of VAT alone cannot be conclusive evidence and concluded that service tax is payable, allowing the Department's appeal.

2. The appellant argued that the supply of tug does not constitute a service under SOTG. They relied on the definition of SOTG service and a Circular by the Board, emphasizing the importance of VAT payment. They also cited a High Court decision and a CESTAT decision to support their case.

3. The Department contended that effective control remained with the appellant as only the right of use was transferred, not possession. They cited a Tribunal decision to support their argument.

4. The Tribunal analyzed the cited decisions and agreements in similar cases. They noted that each case must be considered individually, and blindly following previous decisions may not be appropriate. The Tribunal distinguished the facts of the cited cases from the present case, emphasizing the need for a case-specific analysis.

5. After reviewing the agreement between the parties, the Tribunal found that effective control of the tug remained with the appellant. While acknowledging arguments in favor of the appellant, the Tribunal concluded that the appellant had not made out a prima facie case for total waiver. The Tribunal directed the appellant to deposit a specified amount within a deadline, with a waiver of predeposit of the balance dues and a stay of recovery during the appeal period.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved and the Tribunal's reasoning in reaching its decision.

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