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Issues: Application for waiver of predeposit of service tax, interpretation of Business Auxiliary Service, applicability of Notification No. 14/2004-ST, liability commencement date, compliance with statutory requirements, waiver of pre-deposit, and stay of recovery pending appeal.
In this judgment by the Appellate Tribunal CESTAT CHENNAI, the issue at hand was the application for waiver of predeposit of service tax amounting to Rs. 11,29,851/- for the period July 2003 to March 2006, along with interest and penalties imposed under Sections 76, 77, and 78 of the Finance Act, 1994. The dispute revolved around the classification of the services provided by the applicants as "Business Auxiliary Service" and the denial of the benefit of Notification No. 14/2004-ST by the adjudicating authority. The authority contended that the exemption under the notification was for "provision of service," whereas the applicants were engaged in "promotion or marketing of service," which was not covered by the exemption. Upon examination, the Tribunal found that the applicants had established a prima facie case that the liability to service tax arose only from 10-9-04, based on the lower authority's findings and the notice issued by the Superintendent calling for registration as a service provider for providing Business Auxiliary Service effective from that date. It was noted that the tax liability for the period post 10-9-04 would be approximately Rs. 6 lakhs. The Tribunal observed that the benefit of the notification claimed by the applicants was not available to them due to the clear language of the notification. Furthermore, the Tribunal acknowledged that the applicants had already deposited Rs. 2 lakhs and deemed this amount sufficient for compliance with the statutory requirement of Section 35F of the Central Excise Act, 1944, as the liability was deemed to have commenced only from 10-9-2004. Consequently, the Tribunal decided to waive the pre-deposit of the remaining tax and penalty amount and stayed the recovery pending the appeal process. This decision was made to ensure procedural fairness and to prevent undue financial burden on the appellants during the course of the appeal.
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