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Issues involved: Application seeking waiver of pre-deposit of Service Tax and penalty imposed under Section 78 of the Finance Act, 1994.
Summary: The applicant, a Government of India Enterprise, was alleged to have rendered services falling under Business Auxiliary Services by procuring goods for clients, which the Department considered as service charges. The applicant argued that they purchased goods on high sea sale basis and later sold them to clients, including a mark-up charge in the sales invoices. The Department contended that the mark-up charges were service charges for procurement of goods. The Tribunal analyzed sample invoices and observed that the applicant was engaged in the purchase and re-sale of goods, questioning the extension of Service Tax levy to re-sale of goods under Business Auxiliary Services. Referring to a relevant case, the Tribunal opined that mark-up charges, even if considered as profit, could not be subjected to Service Tax. Consequently, the Tribunal waived the pre-deposit of dues and stayed the recovery during the appeal's pendency.
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