2015 (11) TMI 781 - AT - Service Tax

Waiver of pre deposit - Penalty u/s 78 - transportation of raw materials - Held that - The charges in respect of loading and un-loading of the materials and internal transportation, are shown separately in the agreement. In case of M/s Balmer Lawrie & Co. Ltd. (2013 (11) TMI 712 - CESTAT MUMBAI), it has been held that when cargo handling charges and transportation charges are shown separately in the bills raised, then service tax liability is required to be discharged only on cargo handling services and that question of leviability of service tax on the entire amount is un-sustainable. Similarly, in case of M/s Jai Jawan Coal Carriers Pvt. Ltd. (2014 (6) TMI 393 - CESTAT NEW DELHI), it has been held by CESTAT, New Delhi, that when activity of loading of materials into trucks and its subsequent un-loading is clearly identified from the transportation of materials within the factory, then service tax would not be chargeable on the amount charged towards transportation of materials. In view of the above case laws, the Appellant has made out a prima-facie case for complete waiver of the confirmed dues. - there will be stay on recovery of the confirmed dues, interest and penalty till the disposal of this appeal. - Stay granted.

Summary

Issues:
1. Stay petition against Order-in-Original confirming demand, interest, and penalty under Section 78 of the Finance Act, 1994.
2. Interpretation of service tax liability on loading, un-loading, and transportation of materials within factory premises.
3. Application of case laws M/s Balmer Lawrie & Co. Ltd. and M/s Jai Jawan Coal Carriers Pvt. Ltd. in determining service tax liability.

Analysis:
1. The stay petition was filed against Order-in-Original No.67/S.Tax/Commr./2012, confirming a demand of Rs. 1,28,82,058/- along with interest and imposing a penalty of Rs. 1,30,00,000/- under Section 78 of the Finance Act, 1994. The Applicant argued that they provide loading, un-loading, and transportation services within the factory premises of M/s Tata Steel Ltd. They contended that service tax liability is discharged under Cargo Handling Charges for loading and un-loading raw materials, while transportation within the factory premises, where freight is paid by M/s Tata Steel Ltd., does not attract service tax.

2. The issue revolved around the interpretation of service tax liability on the transportation of raw materials within the factory premises. The charges for loading, un-loading, and internal transportation were separately identified in the agreement. Referring to case laws like M/s Balmer Lawrie & Co. Ltd. and M/s Jai Jawan Coal Carriers Pvt. Ltd., it was argued that service tax is applicable only on cargo handling services when charges are shown separately. The Tribunal noted that if loading and un-loading activities are distinct from transportation within the factory, service tax is not leviable on the transportation charges. Relying on these precedents, the Tribunal found a prima facie case for a complete waiver of the confirmed dues and granted a stay on recovery pending appeal.

3. The ld. Advocate for the Applicant cited relevant case laws to support their argument, emphasizing the distinction between cargo handling charges and transportation charges in determining service tax liability. The Tribunal, after hearing arguments from both sides and examining the case records, concluded that the Applicant had made a strong case for the stay on recovery of confirmed dues, interest, and penalty. By applying the principles established in previous judgments, the Tribunal allowed the stay petition, highlighting the importance of separate identification of charges and activities to determine service tax liability accurately.