2011 (2) TMI 819 - AT - Service Tax

Waiver of pre-deposit - Appellant submits that the activity involved was renting out the buses to APSRTC while the appellant retained the actual possession and control of the buses - This activity was brought under the tax net w.e.f. 16-5-2008 under the entry of supply of tangible goods - Held that, the activity involved prima facie, supply of tangible goods which became taxable after period of dispute - stay granted.

Summary

Issues:
Waiver of pre-deposit of service tax, penalty, and interest for taxable services rendered during 2005-06 and 2006-07.

Analysis:
The judgment involves a case where the appellant sought waiver of pre-deposit of service tax, penalty, and interest amounting to Rs.90,707/- and Rs.1,07,584/- for taxable services provided in 2005-06 and 2006-07. The impugned order upheld the penalty under Section 78 of the Finance Act and confirmed the demand for applicable interest on the service tax. The appellant argued that a similar case was decided in favor of the assessee by the Tribunal in the case of Shri G. Karunakara Reddy. The Tribunal had granted full waiver of pre-deposit in that case, setting a precedent for the current appeal.

In the previous case of Shri G. Karunakara Reddy, the Tribunal had affirmed the demand of Rs. 2,64,229/- and Rs. 1,70,154/- for the years 2005-06 and 2006-07, respectively, towards 'business auxiliary service' provided by leasing out buses to Andhra Pradesh State Road Transport Corporation (APSRTC). The original authority found that the appellant had rendered 'business auxiliary service' as per Section 65(19)(vi) of the Act. However, the Tribunal, after considering the submissions, concluded that the activity involved the supply of tangible goods and not the provision of service on behalf of APSRTC. Therefore, the Tribunal ordered a waiver of pre-deposit of dues adjudged against the appellants in that case.

Based on the precedent set in the case of Shri G. Karunakara Reddy, the Tribunal in the current appeal granted a complete waiver of pre-deposit of dues adjudged against the appellant. The Tribunal found that the activity involved in the current case also prima facie constituted the supply of tangible goods, which became taxable after the disputed period. The appellant had not provided any service on behalf of APSRTC by leasing out buses under a contract. Consequently, the Tribunal allowed the stay application and ordered the waiver of pre-deposit of the dues pending the decision in the appeal.

In conclusion, the Tribunal's decision in both cases highlights the importance of analyzing the nature of the activity to determine the tax liability correctly. The Tribunal considered the specific circumstances of each case and granted waivers based on the nature of the services provided, emphasizing the need for a thorough examination of the facts and legal provisions in service tax disputes.