2011 (7) TMI 561 - AT - Service Tax

Waiver of pre-deposit - Service Tax under the category of Business Auxiliary Services - Applicant undertake the disbursement of salary of Govt. employees & receive certain reimbursement for the same - Held that - The reimbursement or commission received by the applicant is in relation to statutory function of the Govt. which the applicant has shown with the help of the certificates issued by the State Govt. authorities - This is not a consideration for activities which are covered under the definition of commission agent under Business Auxiliary Service - This contention of the applicant gets support from the principle of ejusdem generis - Prima facie it appears that the service would not fall under Business Auxiliary Service -Thus,the applicant has made out a case for complete waiver of pre-deposit

Summary

Issues:
Waiver of pre-deposit of Service Tax under Finance Act, 1994 for managerial charges received by the applicant for maintenance of salary account bookkeeping of Govt. employees.

Analysis:
The applicant sought a waiver of pre-deposit of Service Tax amounting to Rs. 87,686/-, arguing that the charges received for maintaining salary accounts of Govt. employees should not be considered as commission under the definition of a commission agent. The applicant claimed they were involved in the statutory function of disbursing salaries, supported by certificates from Government Education offices. The department contended that the applicant received commission for services rendered and therefore should be liable for Service Tax under Business Auxiliary Services.

Undisputedly, the applicant's role involved disbursing salaries of Govt. employees and receiving reimbursement, which was recorded as commission in their accounts. However, the reimbursement or commission was related to a statutory function of the Govt., as evidenced by certificates from State Govt. authorities. The Tribunal applied the principle of ejusdem generis and found that the service provided did not fall under Business Auxiliary Services. Consequently, the Tribunal concluded that the applicant had established a case for a complete waiver of pre-deposit. As a result, the pre-deposit of Service Tax, interest, and penalty was waived, and the recovery was stayed pending the appeal, thereby allowing the stay petition.

This judgment highlights the importance of analyzing the nature of services provided and the specific circumstances under which payments are received to determine the applicability of Service Tax. The Tribunal's decision was based on a careful consideration of the statutory function performed by the applicant and the nature of the reimbursement received, ultimately leading to the grant of a waiver and stay on recovery during the appeal process.