2011 (2) TMI 550 - AT - Service Tax

Application for waiver and stay - Intellectual Property Right Services and Scientific and Technical Consultancy Services - Prima facie, the appellant paid service tax under the head Intellectual Property Right Services in respect of the royalty received by them for the period from 10.09.04 to 31.03.05 - Decided in favour of the assessee

Summary

Issues involved:
Demand of service tax under "Scientific and Technical Consultancy Services" and "Intellectual Property Right Services" for the period prior to 10.09.04, invocation of the Provisional Collection of Taxes Act, 1931, waiver and stay application.

Analysis:

1. Demand of Service Tax under "Scientific and Technical Consultancy Services" and "Intellectual Property Right Services" for the period prior to 10.09.04:
The appellant was demanded service tax of Rs.15,57,692/- under the heads of "Scientific and Technical Consultancy Services" and "Intellectual Property Right Services" for the period from 1.4.2004 to 31.3.05. However, it was noted that the show-cause notice did not propose to demand service tax under the head "Scientific and Technical Consultancy Services." Additionally, a part of the demand was related to 'Royalty' received by the appellant as consideration for intellectual property transferred before 10.09.04, a period when this service was not taxable. The Tribunal found a prima facie case for the appellant against this part of the demand, leading to a decision in favor of the appellant for waiver of pre-deposit and stay of recovery for the service tax demanded for the period prior to 10.09.04.

2. Invocation of the Provisional Collection of Taxes Act, 1931:
The authorities below had invoked the provisions of the Provisional Collection of Taxes Act, 1931, despite the fact that service tax was not covered under Section 3 of the said Act. This raised a procedural issue as the Act did not apply to service tax. The Tribunal considered this aspect in the case and highlighted the incorrect invocation of the Act by the lower authorities. This played a crucial role in the decision to grant waiver of pre-deposit and stay of recovery for the penalties imposed on the appellant.

3. Waiver and Stay Application:
The application before the Tribunal sought waiver and stay regarding the demand of service tax under different categories for the specified period. After perusing the records and hearing both sides, the Tribunal found in favor of the appellant based on various grounds, including the incorrect proposal in the show-cause notice, non-taxable period for certain services, and the incorrect application of the Provisional Collection of Taxes Act, 1931. Consequently, the Tribunal granted the waiver of pre-deposit and stay of recovery for the service tax demanded from the appellant for the relevant period and penalties imposed on them, ensuring relief for the appellant in this legal matter.

This detailed analysis of the judgment highlights the key issues involved in the case and provides a comprehensive understanding of the Tribunal's decision in favor of the appellant based on the legal arguments presented and the examination of relevant facts and provisions.