Freight liability and agency status: prima facie case justified waiver of pre-deposit and stay of recovery.

A manufacturer of transformers was found, on a prima facie assessment, not to have acted as an agent for transportation of goods by road where freight charges were borne by the purchasers. The statutory condition for fastening service tax liability on the freight charges was therefore not shown to be satisfied at the interim stage. That strong prima facie case justified waiver of pre-deposit and stay of recovery pending disposal of the appeal.

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Issues: Whether the appellant was required to make the pre-deposit and whether, on the facts, it could be treated as an agent for transportation of goods by road so as to attract the service tax demand.

Analysis: The appellant was a manufacturer and supplier of transformers. The freight charges were stated to be borne by the purchasers, and the appellant had not acted as an agent for transportation of goods by road in a goods carriage. On a prima facie assessment, the appellant's contention that the statutory condition for treating it as the person liable on the freight charges was not satisfied found support. The existence of a strong prima facie case justified relief against insistence on pre-deposit at this stage.

Conclusion: The appellant was entitled to waiver of pre-deposit and stay of recovery pending disposal of the appeal.

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