2009 (8) TMI 719 - AT - Service Tax

Waiver of pre-deposit demand limitation - applicant had on 14-11-1998 sought the clarification of the Revenue authorities as regards the discharge of service tax liability - Revenue authorities did not reply - clarified that the service tax liability has to be calculated by working back on the amounts received from the clients - clarifications could have been given to the applicant by the authorities when they are approached - prima facie case for the waiver of the pre-deposit waiver - allowed

Summary

Issues:
1. Stay petition against waiver of pre-deposit of Service Tax and Penalty amounts.
2. Discharge of service tax liability on the value of taxable services.
3. Time-barred demand and limitation period.
4. Duty of the applicant to recalculate service tax on amounts received from clients.
5. Clarification from Revenue authorities on service tax liability calculation.
6. Prima facie case for waiver of pre-deposit on limitation grounds.

Analysis:

The judgment by the Appellate Tribunal CESTAT, Bangalore involved a stay petition challenging the waiver of pre-deposit of Service Tax and Penalty amounts. The applicant contended that the demand was raised due to non-discharge of service tax liability on taxable services, highlighting a letter seeking clarification from the Revenue authorities in 1998. The applicant argued that the demand was time-barred as the show cause notice was issued in 2004, and any demand within the limitation period had been discharged.

The Revenue authorities, on the other hand, emphasized the applicant's duty to recalculate service tax on amounts received from clients and presented a calculation by the applicant showing the liability. The Tribunal noted that the applicant had sought clarification in 1998, and the Central Board of Excise and Customs clarified the calculation method in 2006, which could have been provided earlier. Consequently, the Tribunal found that the applicant had established a prima facie case for waiver of the pre-deposit amount solely on limitation grounds.

In conclusion, the Tribunal allowed the application for waiver of pre-deposit based on the limitation issue and stayed the recovery of the amount until the appeal's disposal. The judgment underscored the importance of timely and clear communication from Revenue authorities regarding service tax liability calculations and upheld the applicant's argument regarding the time-barred demand and the duty to provide clarification.