Waiver granted for service tax pre-deposit due to lack of control over supplied wagons The Tribunal granted the waiver of pre-deposit of the service tax amount, emphasizing the lack of effective control by the applicant over the wagons ...
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Waiver granted for service tax pre-deposit due to lack of control over supplied wagons
The Tribunal granted the waiver of pre-deposit of the service tax amount, emphasizing the lack of effective control by the applicant over the wagons supplied to the railways under the scheme, leading to a prima facie case in favor of the applicant and the stay of recovery during the appeal process. The appeal was scheduled for regular hearing due to the disputed amount exceeding Rs. one crore and the recurring nature of the issue.
Issues: Waiver of pre-deposit of service tax on tangible goods supplied to railways under the "Own your wagon scheme."
Analysis: The applicant sought waiver of pre-deposit of service tax amounting to Rs. 1,74,93,845/- along with interest and penalty, contending that the wagons provided to the railways under the "Own your wagon scheme" were part of the common pool of railways and used by them for transporting goods, with no effective control by the applicant. The contention was that since there was no transfer of absolute right to use, they were not liable to pay service tax.
The JCDR argued that the applicant was liable to pay service tax under the category of supply of tangible goods as there was no transfer of absolute right to use the wagons to the railways. The demand was upheld based on this argument.
The Tribunal examined the terms of the agreement and noted that the wagons became part of the common pool of railways, used by them for transporting goods, and the applicant did not exercise effective control over the wagons. Consequently, the Tribunal found a strong prima facie case in favor of the applicant. Therefore, the waiver of pre-deposit was allowed, and recovery stayed during the appeal process.
Given that the disputed amount exceeded Rs. one crore and the issue was recurring, the registry was directed to schedule the appeal for regular hearing on 13th October 2011.
In conclusion, the Tribunal granted the waiver of pre-deposit of the service tax amount, emphasizing the lack of effective control by the applicant over the wagons supplied to the railways under the scheme, leading to a prima facie case in favor of the applicant and the stay of recovery during the appeal process.
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