2007 (1) TMI 503 - AT - Service Tax

Summary

Issues:
Demand of service tax on business auxiliary services, imposition of penalty, waiver of pre-deposit, limitation period for demand, interpretation of agreements, suppression of material facts.

Analysis:
The judgment revolves around a demand for service tax of over Rs. 1.10 crores on the appellant for services rendered to three companies, termed as "business auxiliary services." The Commissioner imposed an equal penalty on the appellant. The appellant sought waiver of pre-deposit and stay of recovery, claiming a strong case on merits and limitation. The services provided included organizing meetings, collecting money, processing applications, and liaising with the companies. The show cause notice categorized these services as promotion or marketing and customer care services. The appellant argued they provided banking and non-financial services and were registered accordingly.

On the issue of limitation, the appellant contended that no suppression of facts occurred as they regularly filed returns, and authorities verified the relevant facts. The appellant cited a Tribunal decision to support their stance. However, the department claimed the agreements supporting the appellant's case were never provided for verification. The Tribunal found that the appellant's conduct could be construed as suppression under section 73 of the Finance Act, 1994, as they did not disclose the agreements during verification, leading to a lack of prima facie case for the appellant.

Regarding the merits of the case, the Tribunal observed that the services provided by the appellant, such as organizing investor meetings, aligned with the definition of "promotion or marketing of services provided by the client." The appellant's failure to file returns for business auxiliary services and provide agreements to the department was seen as suppression. Consequently, the Tribunal ruled that the appellant should deposit a reasonable portion of the tax demanded. The appellant offered to deposit 10% of the tax, but the Tribunal set the deposit amount at Rs. 15,00,000, to be paid within four weeks. Both parties were directed to report compliance by a specified date.