2014 (12) TMI 1186 - AT - Service Tax

Waiver of pre-deposit - Valuation - re-imbursement expenses - Manpower Recruitment or Supply Agency services - applicant is not paying service tax on their gross amount received from the service recipient. - Held that - the applicant is providing service to the client on principal to principal basis. In these circumstances, the applicant is required to pay service tax on the gross amount received for the services provided by them. Further, the applicant has non-informed the value of services provided by it. Therefore, we are of the view that the Department has invoked the extended period of limitation. - prima facie case is against the assessee - 50% stay granted.

Summary

Issues:
1. Waiver of pre-deposit of service tax demand along with interest and penalties under Sections 77 and 78 of the Finance Act, 1994.
2. Classification of services provided by the applicant.
3. Liability of the applicant to pay service tax on the gross amount received from the service recipient.
4. Invocation of proceedings against the applicant by the Department.

Analysis:
1. The applicant sought waiver of pre-deposit of service tax demand confirmed by impugned orders, along with interest and penalties. The applicant contended that services provided were on a principal to principal basis, falling under Business Auxiliary Support Service and Management, Maintenance or Repair service, not under Manpower Recruitment or Supply Agency service. The Departmental Representative argued that service tax should be paid on the gross value of services provided. The Tribunal considered the agreements between the applicant and the service recipient, concluding that service tax should be paid on the gross amount received for services provided. The Department's invocation of the extended period of limitation was deemed valid.

2. The applicant's failure to inform the value of services provided led to the Tribunal's decision that a complete waiver of pre-deposit was not warranted. The Tribunal directed the applicant to deposit 50% of the service tax within 8 weeks, with compliance to be reported by a specified date. Upon compliance, recovery of the remaining adjudicated liabilities was stayed during the appeal's pendency. Failure to make the required deposit would result in the appeal being dismissed for non-compliance with the pre-deposit requirement.

In conclusion, the Tribunal upheld the Department's decision regarding the liability of the applicant to pay service tax on the gross amount received for services provided. The Tribunal's order for partial deposit of the service tax and stay on recovery during the appeal process provided a balanced approach considering the circumstances of the case.