2010 (10) TMI 547 - AT - Service Tax

Waiver of pre-deposit - Broadcasting services - The lower authorities are trying to tax the amount received by the appellant from cellular/telephone companies - Appellant is registered under the Broadcasting Services - It is not very clear how the amount received by the appellant would be classifiable under Broadcasting Services - The contentions raised by the learned Counsel that on 10-7-2007, they had given detailed explanation as regards the amount received by them from the cellular companies for the SMSs, which transmitted the new clippings of the assesses - The show-cause notice is issued on 12-12-2008 for demanding Service Tax for the period 2005-2006 to 2007-08 which, prima facie seems to be time-barred . Held that the appellant has made out a prima facie case on merits - Waiver of pre-deposit and recovery thereof stayed.

Summary

Issues:
1. Stay petition for waiver of pre-deposit of Service Tax, interest, and penalties.
2. Tax demand on revenue sharing from SMS services under Broadcasting Services category.
3. Barred by limitation issue due to delayed show-cause notice.

Analysis:
1. The appellant filed a stay petition seeking the waiver of pre-deposit of Service Tax, interest, and penalties amounting to specific figures. After hearing both parties and examining the records, the Tribunal considered the submissions made.

2. The tax demand was based on revenue sharing from SMS services provided by the appellant to cellular phone operators. The authorities categorized these services under 'Broadcasting services,' leading to the imposition of Service Tax, interest, and penalties. The appellant argued that the issue was time-barred as they had provided detailed information in response to an Audit enquiry in 2007. The Tribunal noted the revenue sharing agreement between the parties, indicating a 50:50 split of net revenue, but questioned the classification under Broadcasting Services, especially since the appellant was registered under a different category.

3. The Tribunal acknowledged the appellant's contention regarding the time limitation, emphasizing that despite providing explanations in 2007, a show-cause notice was issued in 2008 for demanding Service Tax for previous years. Considering the prima facie case on merits and the time-bar issue, the Tribunal found in favor of the appellant, allowing the application for waiver of pre-deposit and staying the recovery until the appeal's disposal.

This judgment highlights the importance of timely actions by tax authorities and the need for clear classification of services for tax purposes. The Tribunal's decision to grant the waiver and stay recovery underscores the significance of procedural fairness and adherence to statutory limitations in tax matters.