CESTAT Ahmedabad Upholds Waiver of Service Tax & Sets Conditions for Chilled Water Supply Classification

The Appellate Tribunal CESTAT Ahmedabad upheld the waiver of service tax amount, interest, and penalties under the Finance Act, 1994, while directing the appellant to pre-deposit Rs.65,00,000 within eight weeks for stay on recovery pending appeal. The Tribunal found the classification of chilled water supply as Business Support Service arguable and requiring further scrutiny, setting conditions for the appeal's disposal.

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Issues:
1. Waiver of service tax amount, interest, and penalties confirmed under Finance Act, 1994.
2. Classification of chilled water supply as Business Support Service.
3. Requirement for pre-deposit and stay on recovery pending appeal.

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Issue 1: Waiver of Service Tax Amount, Interest, and Penalties

The appellant filed a stay petition seeking the waiver of an amount of Rs.3,61,53,313/- confirmed as service tax, interest, and penalties under the Finance Act, 1994. The adjudicating authority and the first appellate authority had upheld the demands, interest, and penalties. The Tribunal heard both sides and reviewed the records to assess the appellant's liability.

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Issue 2: Classification of Chilled Water Supply as Business Support Service

The dispute centered around whether the supply of chilled water by the appellant to their sister concern constituted Business Support Service. The appellant argued that they were selling chilled water and had paid VAT on such sales, indicating it was not a service. However, upon examination of the records, it was found that the appellant billed the sister concern for steam consumption, not for the quantity of chilled water supplied. The chilled water was used by the sister concern and returned to the appellant for further chilling. The Tribunal deemed this issue arguable and requiring detailed scrutiny at the final disposal of the appeal.

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Issue 3: Requirement for Pre-Deposit and Stay on Recovery Pending Appeal

In light of the above, the Tribunal directed the appellant to pre-deposit Rs.65,00,000/- within eight weeks and report compliance by a specified date. The Deputy Registrar would verify compliance and present the file for further orders. Subject to this pre-deposit, the application for waiving the remaining balance amounts was allowed, and recovery was stayed pending the appeal's disposal.

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This judgment by the Appellate Tribunal CESTAT Ahmedabad addressed the appellant's request for the waiver of confirmed service tax, interest, and penalties, examined the classification of chilled water supply, and imposed a pre-deposit requirement with a stay on recovery pending appeal. The decision highlighted the need for detailed analysis on the classification issue and set conditions for further proceedings.

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