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2013 (5) TMI 396 - HC - Central ExciseWaiver of pre-deposit of service tax dues - business support services - date of levy - Whether CESTAT was justified in holding that the Appellants failed to make out a prima facie case that the agreement is for providing business support services? - Held that - Petitioner adverted to the decision of an application for stay in Fire Switchgears vs. Commissioner of Central Excise, (2011 (10) TMI 455 - CESTAT, NEW DELHI) in which it was held that where a new entry has been carved out subsequently for the purpose of service tax, it has to be held that the same was not covered by any prior existing category of service. Having regard to these facts, petitioner has made out a prima facie case on merits raising a serious triable issue. The Court has been informed that for the subsequent period after the insertion of clause 90(a), the petitioner has been paying service tax. The dispute as noted earlier relates to the period prior to insertion of clause 90(a). The issue as to whether the petitioner was providing a support service of business or commerce under the terms of the agreement involves a serious triable question - appellant granted a waiver of pre-deposit.
Issues:
1. Whether the CESTAT was justified in holding that the appellant failed to make out a prima facie case regarding the agreement for providing business support services. Detailed Analysis: The appellant appealed against an order of the Customs Excise and Service Tax Appellate Tribunal (CESTAT) regarding a waiver of pre-deposit of service tax dues amounting to Rs.55,95,977/- along with interest and penalty for the period from March 2006 to May 2007. The substantial question of law admitted for consideration was whether the CESTAT was correct in determining that the appellant failed to establish a prima facie case regarding the agreement for providing business support services. The crux of the issue revolved around an agreement entered into by the appellant in August 2004 with International Synthfabs Private Ltd. (ISPL) for the use of plant, machinery, and equipment. The key contention was whether this agreement constituted the rendering of support services of business or commerce as per Section 65(104c) of the Finance Act. The definition of "support service of business or commerce" was crucial in determining the nature of services provided under the agreement. The introduction of Clause 90(a) with effect from June 2007, encompassing the service of renting immovable property, was noted. However, this clause was not applicable to the period under dispute (2006-2007). The demand of duty amounting to Rs.55.95 lakhs was confirmed by the Adjudicating Authority based on the premise that the appellant was providing a business support service. The appellant relied on a circular by the CBEC and previous tribunal decisions to support their case. The circular elucidated that business support service involves providing support to the business or commerce of the service receiver. Tribunal decisions in similar cases were cited to bolster the argument that the services provided by the appellant did not fall under the category of support services of business or commerce. Considering the facts and legal precedents presented, the court concluded that the appellant had made out a prima facie case on merits, raising a serious triable issue. Consequently, the court allowed the appeal, granting a waiver of pre-deposit. It was clarified that the observations made were confined to the stay application and would not impact the appeal's final disposal. As the appellant was granted the waiver, necessary consequences were directed to follow, and the appeal was disposed of with no order as to costs.
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