2011 (1) TMI 727 - AT - Service Tax

Waiver of the pre-deposit - maintenance or repair service - In this case the appellant is using the said SAP system and the same is maintained by their parent company situated abroad. In our considered view, the appellant has made out a prima facie case for the waiver of the pre-deposit of the amounts involved - Decided in favour of the assessee

Summary

Issues:
Service Tax liability on the appellant as a service recipient for maintenance or repair services for SAP systems.

Analysis:
The appellant filed a stay petition seeking waiver of pre-deposit of Service Tax, interest, and penalty amounts. The issue revolved around the Service Tax liability on the appellant as a recipient of maintenance or repair services for SAP systems from a foreign entity. The Adjudicating Authority had confirmed the demand, holding the appellant liable to pay Service Tax for the services received.

The appellant's counsel argued that based on precedents, the services in question would only be taxable from a certain date, prior to which the liability did not exist. Referring to specific cases and circulars, the counsel contended that the relevant period in this case fell before the date when the services were deemed taxable. On the other hand, the Departmental Representative relied on a Board's circular to support their position.

After hearing both sides and examining the records, the Tribunal found that the issue of taxing maintenance and repair services for SAP systems had been addressed in a prior case where it was determined that such services were taxable only from a specified date. Considering this and the appellant's use of the SAP system maintained by their foreign parent company, the Tribunal concluded that the appellant had established a prima facie case for the waiver of the pre-deposit amounts. Consequently, the Tribunal allowed the application for waiver and stayed the recovery of the amounts until the appeal's disposal.