2011 (9) TMI 835 - AT - Service Tax

Charges collected as Co-loaders . - Courier agency - The Commissioner has held that the said activities fall under the category of Business Auxiliary Service (BAS) and confirmed demand of service tax Held that - activities of the applicant as Co-loader , prima-facie, is falling under the category of BAS inasmuch as the applicant has rendered such services to other parties who provided courier services. Merely because the parties to whom they provided services were operating under the banner of DTDC in terms of franchise agreements, the said parties, prima-facie, cannot be treated other than as clients. - stay granted partly.

Summary

Issues:
1. Whether the activities of a 'Co-loader' fall under the category of Business Auxiliary Service (BAS) for the purpose of service tax liability?
2. Is the demand for service tax raised by the Commissioner time-barred?
3. Whether the applicant's payment of service tax under the category of Business Support Service (BSS) for a specific period affects the current demand for service tax under BAS?

Analysis:
1. The case involved a dispute regarding the service tax liability of an applicant providing 'Courier service' who also acted as a 'Co-loader' for other parties operating under the banner of 'DTDC Courier Service'. The Commissioner held that the activities of the applicant as a 'Co-loader' fell under the category of Business Auxiliary Service (BAS) and demanded service tax along with penalties. The applicant argued that their activities should be classified as 'Business Support Service' (BSS) instead of BAS, citing a Board circular from 1996 exempting 'Co-loader' activities from service tax. The Tribunal observed that the applicant's services as a 'Co-loader' to other courier service providers constituted BAS, especially after the definition amendment in 2004. The Tribunal also noted the applicant's failure to disclose relevant details to the Department, justifying the invocation of the extended period of limitation for demanding service tax.

2. The Tribunal considered the issue of the demand for service tax being time-barred. The applicant contended that the demand notice issued in 2009 for the period from 2004 to 2006 was beyond the statutory time limit. However, the Tribunal upheld the demand, stating that the applicant's failure to disclose relevant details justified invoking the extended period of limitation for demanding service tax.

3. Regarding the applicant's payment of service tax under the category of BSS for a specific period, the Tribunal acknowledged the payment made for May and June 2006. Consequently, the Tribunal directed the applicant to deposit a specified sum within a stipulated period and waived the pre-deposit of the remaining amount demanded in the order, pending the appeal's disposal. This decision balanced the applicant's compliance with the deposit requirement and the stay of recovery pending the appeal's outcome.

This detailed analysis of the judgment highlights the key legal issues, arguments presented by the parties, and the Tribunal's reasoning leading to the final decision.