2011 (2) TMI 700 - AT - Service Tax

Waiver of pre-deposit - Business Auxiliary Services - the applicants are promoting the sales of their principals by using brand name, namely Blue Mount - notification No. 6/2005-S.T., dated 1-3-2005 - applicants have mis-interpreted the notification, and hence, prima facie we find that the applicants are not entitled for the benefit of the said notification - Decided in against the assessee by way of direction to deposit 50% of demand

Summary

Issues:
1. Waiver of pre-deposit of service tax confirmed under 'Business Auxiliary Services'.
2. Interpretation of notification No. 6/2005-S.T. regarding exemption from service tax.

Analysis:
The judgment deals with the issue of waiver of pre-deposit of service tax confirmed against the applicants under the category of 'Business Auxiliary Services'. The applicants, franchisees of a company, were selling garments under the brand name 'Blue Mount' and were issued a show cause notice to pay service tax on the commission received for the sale of garments. The applicants claimed exemption under notification No. 6/2005-S.T., stating that their total commission received in a financial year was less than 4 lakhs. However, the Revenue argued that as the applicants were promoting sales using the brand name 'Blue Mount', they were not entitled to the exemption under the said notification.

Upon hearing both sides, the tribunal found that the applicants had misinterpreted the notification. The tribunal held that the applicants were not entitled to the benefit of the notification and directed them to deposit 50% of the service tax demand within 8 weeks. The tribunal also ordered the applicants to report compliance by a specified date, with the recovery of the balance amount of demand and penalty stayed during the pendency of the appeal.

In conclusion, the judgment clarifies the interpretation of notification No. 6/2005-S.T. in the context of exemption from service tax for activities related to 'Business Auxiliary Services'. The tribunal's decision highlights the importance of correctly understanding and applying relevant notifications in tax matters to determine the tax liability of the parties involved.