Tribunal Waives Pre-Deposit of Service Tax in Supply of Goods Case

The applicant sought waiver of pre-deposit of service tax amounting to &8377; 10,79,156 demanded for the period from 16.05.2008 to 31.03.2009 in relation to the supply of tangible goods service. The Tribunal granted the waiver, concluding that the applicant had established a prima facie case for the waiver of pre-deposit of service tax. Consequently, the entire demand for pre-deposit was waived, and the recovery of the amount was stayed pending the disposal of the appeal.

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Issues:
Waiver of pre-deposit of service tax on supply of tangible goods service.

Analysis:
The applicant sought waiver of pre-deposit of service tax amounting to &8377; 10,79,156/- demanded for the period from 16.05.2008 to 31.03.2009 in relation to the supply of tangible goods service. The applicants are involved in the manufacture of industrial gases and have a specific agreement with customers for the provision and maintenance of Vacuum Insulated Transport Tanks (VIST) at the customers' premises, for which they receive Fixed Facility Charges (FFC). The contention put forth by the Ld. Advocate was that since excise duty and VAT were already paid on the FFC, demanding service tax on the same transaction value would be unjust. Reference was made to a decision of the Bangalore Bench of the Tribunal in a similar case, wherein waiver of pre-deposit was granted.

The Ld. AR, however, argued in favor of the demand raised by the adjudicating authority, emphasizing that service tax is applicable on the supply of tangible goods as per the provisions of Section 65 (zzzzj) of the Finance Act. Upon reviewing the supplementary invoices and the excise duty payment records of the applicant, it was observed that excise duty had indeed been discharged on the FFC value of &8377; 20,000/- per month, as documented in the Original Order of the adjudicating authority. Drawing parallels with the Tribunal's decision in the applicant's own case from the Bangalore Bench, where a stay was granted, it was concluded that the applicant had established a prima facie case for the waiver of pre-deposit of service tax. Consequently, the entire demand for pre-deposit was waived, and the recovery of the amount was stayed pending the disposal of the appeal. The application for stay was allowed, and the decision was dictated and pronounced in open court.

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