Cargo handling sub-contractor service tax dispute turned on revenue neutrality, input credit, and interim waiver of pre-deposit.

Cargo handling services performed by a sub-contractor in a composite arrangement were treated as prima facie falling within the same service category as the main contractor's activity. On the pleaded facts, the Tribunal accepted that payment of tax by the appellant could be revenue-neutral because the principal recipient was stated to be entitled to input credit, and it also relied on the contemporaneous Board instruction concerning services rendered to a prime contractor. On that interim basis, waiver of pre-deposit was granted and recovery of the demand was stayed pending disposal of the appeal.

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Issues: Whether the appellant was entitled to waiver of pre-deposit and stay of recovery of the service tax demand pending disposal of the appeal.

Analysis: The appellant was rendering cargo handling services as a sub-contractor in a composite arrangement where the main contractor had already discharged service tax on the cargo handling activity. The Tribunal found prima facie force in the submission that the services fell within the same service category and that payment of tax by the appellant would, on the pleaded facts, result in a revenue-neutral situation since the principal recipient could take credit of the tax paid. The contemporaneous Board instruction governing services rendered to a prime contractor was also relied upon as supporting the appellant's interim case.

Conclusion: Waiver of pre-deposit was granted and recovery of the impugned demand was stayed pending disposal of the appeal.

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