2012 (6) TMI 580 - AT - Service Tax

Demand of service tax C&F services - demands stand confirmed by taking the entire consideration figures from the balance sheet of the appellant Held that - Service Tax discharged by treating the services as Business Auxiliary services is to the tune of around Rs. 13,87 lakhs approximately. applicant-appellant directed to make further deposit of Rs. 2.5 lakhs

Summary

Issues:
1. Confirmation of Service Tax liability for the period October 2002 to March 2007.
2. Consideration of Service Tax already paid under Business Auxiliary services.
3. Interpretation of the contract for C&F agency services.
4. Limitation period for the demand.
5. Direction for further deposit and waiver of penalty.

Analysis:

1. The Tribunal confirmed a Service Tax liability of Rs. 23,07,340 against the appellant for providing C&F services to their client from October 2002 to March 2007. The demand was based on consideration figures from the balance sheet, but the appellant had already paid around Rs. 13,87 lakhs under Business Auxiliary services, which the adjudicating authority failed to consider. The Tribunal directed the amount deposited under Business Auxiliary services to be neutralized against the confirmed demand.

2. The Tribunal noted the registration obtained by the appellant under Business Auxiliary services in 2004 and the Service Tax paid accordingly. Despite raising this point before the original adjudicating authority, the tax liability was not adjusted. The Tribunal emphasized the need to neutralize the amount already deposited against the confirmed demand, treating it as if a demand of around Rs. 10 lakhs was confirmed by the Additional Commissioner.

3. Regarding the interpretation of the contract between the appellant and their client for C&F agency services, the adjudicating authority referred to this contract to establish the nature of services provided. The Tribunal found this issue contentious and subject to argument, leading to a direction for further deposit by the appellant.

4. Addressing the limitation period for the demand, the Tribunal directed the appellant to make a further deposit of Rs. 2.5 lakhs within six weeks, subject to which the pre-deposit of the balance amount of duty and the entire penalty would be waived.

5. The Tribunal scheduled a follow-up for compliance on December 2, 2011, to ensure the appellant's adherence to the directed deposit and to monitor the overall compliance with the order.