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Issues involved: Application for waiver of pre-deposit of Service Tax amount, interest, and penalty under Section 66A of the Finance Act, 1994.
Summary: The case involved two applicants, M/s. Shreya Flora and M/s. Star Flora, seeking waiver of pre-deposit of Service Tax amount, interest, and penalty under Section 66A of the Finance Act, 1994. The demand was confirmed under the category of Intellectual Property Service. The applicants contended that they, as recipients of Intellectual Property Service from a service provider outside India, were not liable to pay Service Tax. They argued that the service provider having an agent in India constituted a business establishment in India, making the service provider liable for the tax, not the applicants. However, the Revenue maintained that the applicants received taxable service from the foreign service provider, thus justifying the demand. The Revenue demanded Service Tax based on Section 66A of the Finance Act, which states that if a service is provided by a person outside India and received by a person in India, the recipient is liable to pay the Service Tax. The applicants' reliance on Explanation-1 to Section 66A was considered. The explanation clarifies that a person with a business through a branch or agency in any country is deemed to have a business establishment in that country. In this case, where the service provider is outside India and the recipient is in India, the applicants were held liable to pay Service Tax under Section 66A. As the applicants had not made a case for waiver of Service Tax, they were directed to deposit the remaining confirmed amount within eight weeks. Upon deposit, the pre-deposit of interest and penalties would be waived for the appeal hearing scheduled for 17-10-2013.
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