2007 (11) TMI 468 - AT - Service Tax

Summary

Issues involved: Service tax demand on overriding commission for service rendered to a foreign company, applicability of earlier decisions, benefit of stay order, pre-deposit requirement.

Service Tax Demand on Overriding Commission:
The Commissioner demanded service tax and education cess from the appellants for services provided to M/s. Saudi Arabian Airlines as 'business auxiliary service'. The tax demand was based on the overriding commission received in Indian currency from the foreign company. The appellants argued for a similar treatment as in a case involving Malaysian Airlines and a reinsurance broker, where waiver of predeposit was granted due to the export nature of services provided.

Applicability of Earlier Decisions:
The Bench noted that a previous decision regarding service tax on overriding commission was under appeal and stayed by the High Court. The appellants sought to benefit from a stay order granted in a different case involving a reinsurance broker. However, the Bench found that the appellants had not made a prima facie case against the service tax demand for the months of May and June 2006. No plea of financial hardships was raised by the appellants.

Benefit of Stay Order and Pre-Deposit Requirement:
Considering the circumstances, the Bench directed the appellants to pre-deposit a sum of Rs. 5,00,000 within four weeks and report compliance by a specified date.

This judgment addressed the service tax demand on overriding commission for services provided to a foreign company, the relevance of earlier decisions, the benefit of stay orders, and the pre-deposit requirement for the appellants.