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2012 (7) TMI 499 - AT - Service TaxManpower Recruitment and Supply Agency Service - stay application for demand of service tax along with interest and various penalties - Held that - As prima facie the activity undertaken by the applicant is covered under Manpower Supply Services and the applicants are under bonafide belief that their demand for the extended period is not sustainable, therefore, the applicant has failed to make out a case for 100% waiver of pre-deposit for the normal period - against assessee.
Issues:
Demand of service tax for Manpower Recruitment and Supply Agency Service for a specific period. Analysis: The judgment pertains to a stay application against a demand of service tax amounting to Rs.3,86,10,642/- along with interest and penalties imposed on the applicant for the period from 16.06.2005 to 31.5.2009 under the category of Manpower Recruitment and Supply Agency Service. The applicant, engaged in the manufacture of Steel Ingots, faced heavy losses in the steel industry, leading to the inability to clear dues to creditors. Subsequently, an arrangement was made wherein the plant was leased out to another entity under a Leave and License agreement, with all employees of the applicant being engaged by the new entity. The department demanded service tax on the reimbursement made by the new entity to the applicant. The applicant contended that as they received no consideration for the activity, they should not be liable to pay service tax. Upon reviewing the records, the Tribunal found that the activity undertaken by the applicant falls under Manpower Supply Services. While the applicant believed that the demand for the extended period was unsustainable, the Tribunal held that they failed to establish a case for a 100% waiver of pre-deposit for the normal period. Considering the financial status of the applicant, the Tribunal directed them to make a pre-deposit of Rs.50,00,000/- within eight weeks. Upon compliance with this directive, the requirement of pre-deposit for the balance amount of service tax, interest, and penalties would remain stayed during the pendency of the appeal. The Tribunal set a compliance reporting date of 23.05.2012, emphasizing the need for the applicant to adhere to the pre-deposit directive to avail the benefit of the stay on the remaining amount of service tax, interest, and penalties during the appeal process.
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