2011 (7) TMI 549 - AT - Service Tax

Waiver of pre-deposit - Service tax paid on CHA and courier services, under the Notification No. 41/2007-ST dated 06.10.2007 - Held that - Unable to understand the logic behind the decision of the Commissioner requiring the appellants to deposit 25% of the amount. The period involved in the impugned orders is from 10.09.2004 to 31.03.2008 which shows that the substantial portion of the period for which the show cause notices have been issued, is not covered by the Notification No. 41/2007-ST dated 06.10.2007, as amended. As Chartered Accountant submitted that courier services were used for sending brochures and correspondence relating to sales etc. and CHA is used for exports and it is settled law that service tax is admissible in respect of these services. Thus on merits credit is admissible and observations of Commissioner regarding prima facie case being illogical, this a fit case of granting of waiver of pre-deposit.

Issues involved:
1. Rejection of appeals for failure to deposit 25% of the total amount demanded as per stay order.
2. Requirement to claim refund under Notification No. 41/2007-ST dated 06.10.2007 for service tax paid on CHA and courier services.
3. Logic behind the decision of requiring the deposit.
4. Admissibility of service tax credit for courier and CHA services.
5. Granting of waiver of pre-deposit.
6. Decision on merits without requiring any pre-deposit.

Issue 1: Rejection of appeals for failure to deposit 25% of the total amount demanded as per stay order:
The appeals filed by the appellants were rejected based on their failure to deposit 25% of the total amount demanded, as per the stay order issued by the learned Commissioner (Appeal).

Issue 2: Requirement to claim refund under Notification No. 41/2007-ST dated 06.10.2007 for service tax paid on CHA and courier services:
The appellants were required to claim a refund of the service tax paid on CHA and courier services under Notification No. 41/2007-ST dated 06.10.2007. The learned Commissioner observed that since the appellants did not claim the refund and utilized the credit of service tax paid by them, they failed to make out a case for stay.

Issue 3: Logic behind the decision of requiring the deposit:
The Tribunal found the decision of the learned Commissioner requiring the deposit of 25% of the amount demanded to be illogical. The substantial period covered by the show cause notices was not under the purview of Notification No. 41/2007-ST dated 06.10.2007, making it unclear why the appellants were asked to claim a refund under this notification.

Issue 4: Admissibility of service tax credit for courier and CHA services:
The Chartered Accountant representing the appellants argued that courier services were used for sending brochures and correspondence related to sales, while CHA services were utilized for exports. It was contended that service tax credit is admissible for these services. The Tribunal found the credit to be admissible on merits.

Issue 5: Granting of waiver of pre-deposit:
Considering the illogical observations of the learned Commissioner and the admissibility of the service tax credit, the Tribunal granted a waiver of the pre-deposit requirement, allowing the stay petition.

Issue 6: Decision on merits without requiring any pre-deposit:
As the learned Commissioner had not passed the order on merits, the Tribunal decided to remand the matter to the Commissioner (Appeals) for a decision on merits without insisting on any pre-deposit. The appeal was taken up for decision, and the impugned order was set aside.

In conclusion, the Tribunal found in favor of the appellants, granting a waiver of pre-deposit and remanding the matter for a decision on merits without requiring any pre-deposit.

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