2011 (4) TMI 919 - AT - Service Tax

Waiver of pre-deposit - Application for stay - demand of service tax on account of inclusion of reimbursable expenses in the gross value of advertisement service - the appellant intended to take the benefit of DGST s circular in not including such expenses in the gross taxable value mentioned in their service tax returns - Held that - The fact that no document was filed by assessee with the reply to the show-cause notice strengthens our apprehension - Decided against the assessee by way of direction to pre-deposit of Rs. 10, 00, 000

Summary

Issues:
1. Waiver of pre-deposit and stay of recovery sought by the appellant in relation to service tax and penalties.
2. Inclusion of "reimbursable expenses" in the gross value of advertisement service.
3. Demand of service tax on services received from abroad.
4. Inclusion of "Media Write Backs" in the gross taxable value of advertising service.
5. Acceptance of documentary evidence of reimbursements by the assessing authority.
6. Assertion by the appellant regarding submission of necessary documents.
7. Possibility of remand to the adjudicating authority.

Analysis:

1. The appellant sought waiver of pre-deposit and stay of recovery concerning service tax and penalties amounting to over Rs.1.3 crores. The demand primarily arose from the inclusion of "reimbursable expenses" in the gross value of advertisement services provided to clients during 2003-2006, services received from abroad during 2002-2006, and "Media Write Backs" in the gross taxable value of advertising service for 2001-2003.

2. The appellant contended that they had submitted documentary evidence of reimbursements with their service tax returns but were not accepted by the assessing authority. The Director General of Service Tax's circular allowed exclusion of out-of-pocket expenses if supported by documentary evidence. However, the assessing authority included these expenses in the gross taxable value due to lack of evidence, leading to a dispute.

3. The learned Commissioner found fault with the appellant for not providing documentary evidence to substantiate the reimbursements. The appellant's counsel claimed they would have submitted the necessary documents if requested by the adjudicating authority, but the assertion was not convincing to the tribunal.

4. Considering the lack of documentary evidence and the possibility of remanding the case to the adjudicating authority, the tribunal directed the appellant to pre-deposit Rs.10,00,000 within four weeks. Compliance with this directive would result in a waiver of pre-deposit and stay of recovery concerning penalties and the remaining service tax amount, with a review scheduled for 27.05.2011.