2013 (4) TMI 18 - AT - Service Tax

Waiver of Pre-deposit U/s 76 and U/s 78 of the Finance Act, 1994 - service for mobilizing to mutual fund distributors and receiving commissions - Business Auxiliary Services - jurisdiction - Held that - In the case of levy of Service Tax it is difficult to ascertain where the services are rendered and where the services are received unless a finding is recorded on these facts. We agree with learned A.R. (Commissioner) that it becomes a mixed question of facts and law and should have been raised before the Commissioner during the course of adjudication - Such issues could be considered only after a detail deliberation on the place of receipt of services and/or place of delivery of services whereas presently we are examining the impugned order and issues involved on a prima facie basis. Therefore the case laws referred by the Ld. Advocate are not relevant at this stage On the issue of applicability of service tax - Held that - We find that the applicants are rendering their services to the distributors of the various mutual fund companies and not to the Mutual Fund Companies directly hence prima facie we are of the opinion that they are not strictly covered under the said principle of levy of service tax under reverse mechanism as laid down under Rule 2(1)(d)(vi) and applicable to mutual fund distributors of Mutual Fund Companies. On the issue of limitation -Held that - We find that the adjudicating authority has given a cogent finding on the aspect of applicability extended period of limitation which is again a mixed question of facts and law and needs detail analysis which could be made at the time of hearing of the appeal. Guidelines laid down by the Hon ble Supreme Court and other Hon ble High Courts from time to time including that of Hon ble Andhra Pradesh High Court in Shri Chaitanya s case (2011 (1) TMI 356 - HIGH COURT ANDHRA PRADESH ).We direct the applicant to deposit 25% of the Service Tax confirmed against them within a period of Eight Weeks from today and report compliance on 1st of May, 2012. On deposit of the said amount, the balance amount of Service Tax, penalties imposed stand waived and its recovery stayed during the pendency 1st of the appeal.

Summary

Issues Involved:
Jurisdiction of Commissioner, Applicability of Service Tax, Limitation on Demand

Jurisdiction of Commissioner:
The applicant argued that the Commissioner in Jamshedpur lacks jurisdiction to issue and decide the show cause notice as the service was rendered in Kolkata. However, the Revenue contended that the issue of jurisdiction was not raised before the Commissioner during the adjudication proceedings, creating difficulty in determining where the services were actually rendered. The Tribunal found that jurisdiction is a mixed question of law and facts, which should have been raised earlier. The Tribunal disposed of the stay application on a prima facie basis, noting that the department became aware of the non-payment of service tax during a visit to the applicant's factory in 2008, and the applicant had not disputed the jurisdiction of the Commissioner until now. The Tribunal directed the applicant to deposit 25% of the confirmed Service Tax amount within eight weeks, with the balance amount and penalties waived and recovery stayed during the appeal.

Applicability of Service Tax:
The applicant received commissions from finance companies for mobilization of mutual fund units, arguing that the service falls under the reverse charge mechanism and no service tax is payable. The Revenue contended that the applicant marketed mutual funds on behalf of distributing companies and thus cannot claim the reverse charge mechanism. The Tribunal held that the services were rendered to distributors, not mutual fund companies directly, and thus the reverse charge mechanism may not apply. The Tribunal found that the applicant failed to establish a prima facie case for total waiver of pre-deposit of the dues.

Limitation on Demand:
Regarding the limitation on demand, the Revenue argued that the facts of rendering services against commission came to light during a visit to the factory and scrutiny of records in 2008. The Tribunal noted that the adjudicating authority had given a finding on the extended period of limitation, which requires detailed analysis during the appeal hearing. The Tribunal did not find any financial hardship pleaded by the applicant and directed them to deposit 25% of the confirmed Service Tax amount within eight weeks to avoid dismissal of the appeal.

In conclusion, the Tribunal considered the jurisdiction issue, applicability of service tax, and limitation on demand in detail, ultimately directing the applicant to make a partial deposit of the confirmed Service Tax amount while waiving the balance and penalties during the appeal process. The Tribunal emphasized the importance of following legal guidelines and balancing the interests of the Revenue in such matters.