2013 (3) TMI 423 - AT - Service Tax

Demand on the basis of difference between ST-3 return and Balance Sheet - Applicant submitted that the demand is time barred. He further submitted that demand is on amount collected as Vyaj Badla Transactions . At that time there was confusion prevailing in the market and applicant was under bonafide belief that such transaction would not attract Service Tax. Held that - After hearing both sides, Tribunal find that the issue involved in the appeal is non payment of Service Tax on Vyaj Badla Transactions . Tribunal find that the demand is for the period from 1995-96 to 1996-97 and the show-cause notice was issued on 12.03.2001. Tribunal also find that for the period up to 26.12.1997 the applicant was a proprietorship concern and with effect from 26.12.1997 it was converted into Pvt. Ltd. Company. The contention of the learned advocate that after the death of the proprietorship concern its liability cannot be transferred to B.H.H. Securities Pvt. Ltd. under Section 11 of the Central Excise Act, has some force. Tribunal finds that the applicant has a strong prima facie case. - stay granted.

Summary

Issues:
1. Stay application against confirmation of Service Tax and penalty.
2. Time-barred demand for Service Tax on "Vyaj Badla Transactions".
3. Liability transfer from proprietorship concern to Pvt. Ltd. Company.

Analysis:
1. The appellant, a Stock Broking Agent, filed a stay application against the confirmation of Service Tax of Rs.2,09,298/- for the period from 1995-96 to 1996-97, along with a penalty equal to the tax amount. The penalty was initially imposed by the original adjudicating authority under Section 78 of the Finance Act, 1994, and later reduced by the Commissioner (Appeals) due to the death of the proprietor of the firm.

2. The main issue in the appeal was the non-payment of Service Tax on "Vyaj Badla Transactions" for the mentioned period. The appellant argued that the demand was time-barred and that there was confusion in the market regarding the taxability of such transactions. They contended that the brokerage was brought under the net of Service Tax on 01.07.1994, but there was no clarity on the taxability of "Vyaj Badla Transactions" at that time. The appellant also highlighted that the firm operated as a proprietorship concern until 26.12.1997, and the liability for Service Tax of the proprietorship concern could not be transferred to the Pvt. Ltd. Company as per Section 11 of the Central Excise Act.

3. The Deputy Commissioner representing the Revenue supported the findings of the lower authorities, emphasizing that the appellant did not pay Service Tax on the amount collected from "Vyaj Badla Transactions" as shown in the Balance Sheet. However, after considering both sides, the judge found merit in the appellant's arguments. The judge noted that the appellant had a strong prima facie case in their favor based on the grounds of limitation and the conversion of the proprietorship concern to a Pvt. Ltd. Company. Consequently, the judge waived the pre-deposit and granted a stay against the recovery of the Service Tax amount, interest, and penalty during the appeal's pendency.

This comprehensive analysis of the judgment addresses the issues raised in the case and provides a detailed overview of the legal proceedings and arguments presented by both parties.