2011 (4) TMI 914 - AT - Service Tax

Business Auxiliary Services renting of immovable property authorized service station and maintenance & repair services - service tax demand - Held that - Since all the financial records relating to the activities in question had been subjected to scrutiny by the Internal Audit party of the department in 2005 and 2007 there were no additional material based on which show cause notice was issued and adjudication proceedings concluded prima facie extended period could not have been validly invoked in the instant case as regards the demand of tax relatable to free service the promotion of insurance business and financing as well as renting of immovable property. CBEC clarified the liability of the service station to service tax under the head authorized service station in respect of free service only in November 2006 to clear the confusion over the issue. As regards BAS involved in promoting business of the Insurance Company and the Banks/Finance Company the Tribunal in Popular Vehicles and Services Ltd. case (2010 (2) TMI 650 - CESTAT BANGALORE) had decided the dispute in favour of the assessee. As regards renting of immovable property as decided the Home Solutions Retail Ltd. Vs. Union of India 2010 (12) TMI 49 - DELHI HIGH COURT appellant justify its holding bonafide belief that renting of immovable property did not attract service tax - in favour of assessee.

Summary

Issues:
Waiver of pre-deposit and stay of recovery of service tax, education cess, interest, and penalties imposed under various sections of the Finance Act, 1994.

Analysis:
The appellant, a dealer in vehicles, was found to have provided various services classified under 'Business Auxiliary Services,' renting of immovable property services, authorized service station services, and maintenance & repair services. The Commissioner held that the appellant's activities fell under the category of authorized service station services, for which it received compensation from automobile manufacturers, insurance companies, and banks/finance companies. The Commissioner rejected the appellant's argument that incentives received were discounts, not taxable commissions. The appellant was accused of suppression of facts based on discrepancies in the ST-3 returns, leading to the invocation of a larger period for assessment. The appellant argued that audits conducted by the department in 2005 and 2007 had already scrutinized the relevant records, and the demand was time-barred. The appellant also cited legal precedents to support its position on the tax liability related to various services.

The Tribunal considered both parties' submissions and found merit in the appellant's argument that there was no willful suppression of facts. It noted that the demand was raised following a change in the authorities' opinion on the tax liability, rather than new evidence. The Tribunal agreed that the extended period should not have been invoked for demands related to free services, insurance business promotion, financing, and renting of immovable property. It highlighted a CBEC clarification in 2006 regarding service tax liability for authorized service stations providing free services. Legal precedents and the appellant's belief regarding the tax liability of renting immovable property were also considered. The Tribunal concluded that the appellant had a strong prima facie case against the demands based on limitation grounds. Consequently, the Tribunal allowed the application for waiver of pre-deposit and stay of recovery of the dues pending the appeal's decision.

The judgment was delivered by the Appellate Tribunal CESTAT, Bangalore, with the judges M V Ravindran and P Karthikeyan presiding over the case. The appellant was represented by Shri Prasanna Krishnan, CA, while Shri Ganesh Havanur, SDR, appeared for the respondent. The detailed analysis of the judgment highlighted the appellant's arguments, the Commissioner's findings, legal precedents cited, and the Tribunal's reasoning for allowing the application for waiver and stay of recovery.