2013 (6) TMI 416 - AT - Service Tax

Stay - business auxiliary service - extended period of limitation - Held that - As the appellant never took any steps for getting themselves registered with the department or to file service tax returns or to pay service tax, while rendering the taxable service to SWDL without disclosing this fact to the department, the extended period of limitation was rightly invoked against them. - Prima facie case is against the appellants - pre deposit ordered partly.

Issues:
1. Waiver of pre-deposit and stay of recovery sought by the appellant in relation to the adjudged dues.
2. Classification of services provided by the appellant under the agreement as 'Business Auxiliary Service' (BAS) or 'Business Support Services' (BSS).
3. Challenge of demand on the ground of limitation.
4. Financial capability of the appellant to make the pre-deposit.

Waiver of Pre-deposit and Stay of Recovery:
The appellant sought waiver of pre-deposit and stay of recovery concerning the adjudged dues amounting to Rs. 52,82,725 demanded for service tax and education cess for the period 2003-05 under the head 'Business Auxiliary Service' (BAS). The appellant argued that the services rendered were classifiable as 'Business Support Services' (BSS) rather than BAS, emphasizing that BSS was not a taxable service during the disputed period. The appellant also contended that they ceased operations in 2005 and lacked the financial capacity to make the pre-deposit. The Additional Commissioner opposed the plea, asserting that the activities fell under BAS and that the appellant failed to disclose their service tax liability, justifying the invocation of the extended period of limitation.

Classification of Services Provided:
The Tribunal analyzed the provisions of the agreement between the appellant and M/s. Shaw Wallace Distilleries Ltd. (SWDL) to determine the nature of services provided. The agreement appointed the appellant as a 'promoter' for SWDL, outlining various responsibilities such as procurement of purchase orders, promotional activities, and sales of SWDL brands. The Tribunal concluded that the appellant's activities aligned with the definition of BAS, specifically related to the promotion or marketing of goods belonging to the client. Despite the appellant's attempt to classify the services as BSS, the Tribunal found their argument unconvincing. The Tribunal also dismissed the plea of limitation, noting that the appellant failed to disclose their BAS activities to the tax department, justifying the invocation of the extended period of limitation.

Challenge on the Ground of Limitation:
The appellant challenged the demand on the ground of limitation, arguing that they were not liable for service tax as the services provided should be classified as BSS, which was not taxable during the disputed period. However, the Tribunal found that the appellant's failure to disclose their BAS activities to the tax department and comply with registration, filing returns, and paying service tax negated their challenge on limitation grounds. The Tribunal upheld the allegation of suppression of facts to evade service tax payment, indicating that the demand could not be successfully challenged based on limitation.

Financial Capability for Pre-deposit:
Although the appellant claimed financial hardship and inability to make the full pre-deposit, the Tribunal directed them to pre-deposit Rs. 20 lakhs within six weeks. The Tribunal acknowledged the lack of an acceptable plea of financial hardship but decided not to insist on full pre-deposit. Upon compliance, the Tribunal granted waiver of pre-deposit and stay of recovery for penalties imposed on the appellant, along with the remaining service tax, education cess, and interest.

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