2012 (9) TMI 489 - AT - Service Tax

Waiver of pre-deposit of service tax penalty - services received by assessee from legal professionals trade mark consultants advertisement charges and also for business auxiliary services technical testing etc. Held that - as regards to legal professional charges there cannot be any demand on service tax on such services rendered prior to 7.9.2009. As regards the demand of service tax on advertisement charges it needs to be considered as the issue is arguable one and can be considered at the time of final disposal of the appeals. Applicants directed to deposit an amount of Rs.2 lakhs condition of the pre-deposit of the balance amounts involved is waived

Summary

Issues: Stay petitions for waiver of pre-deposit of service tax amount, penalty under Sections 77 and 78 of the Finance Act, 1994.

The judgment by the Appellate Tribunal CESTAT, Ahmedabad, involved considering stay petitions for the waiver of pre-deposit of a service tax amount, penalty under Sections 77 and 78 of the Finance Act, 1994. The Tribunal, comprising M V Ravindran and P Babu, JJ., heard both sides and examined the records before making a decision. The key issue in both appeals was the liability of the appellant to pay service tax for services received from legal professionals, trademark consultants, advertisement charges, business auxiliary services, and technical testing between August 2005 and June 2008.

Upon review, it was noted that the lower authorities found the appellant liable to pay service tax for the mentioned services. However, the appellant argued that payments made to upcountry consultants/legal practitioners were for legal charges, and the precedent set in the case of Sobha Developers Ltd. Vs. C.C.E., Bangalore should apply to their situation. The Tribunal acknowledged that the issue of services rendered by legal professionals had been previously considered by a bench in the Sobha Developers Ltd. case, where it was held that no service tax demand could be made for services rendered before 7.9.2009.

Regarding the demand for service tax on advertisement charges, the Tribunal deemed the issue arguable and subject to further consideration during the final disposal of the appeals. Consequently, the Tribunal directed the appellants to deposit Rs.2 lakhs within four weeks and report compliance by a specified date. Upon compliance, the pre-deposit condition for the remaining amount was waived, and recovery stayed until the appeals' final disposal. The judgment highlighted the importance of precedent, legal arguments, and the need for a balanced approach in determining the liability for service tax and penalties under the Finance Act, 1994.