2013 (8) TMI 255 - AT - Service Tax

Service tax liability Whether the activity of collecting exposed photo films and forwarding them to colour labs for colour developing and re-collection from the processing labs is liable to service tax - chargeable service of photography studio or agency in relation to photography service u/s 65(105)(zb) Held that - The court granted the absolute waiver of the liability it is clear from the last sentence of the CBEC Circular dated 27.12.2001 that where a collection centre which acts merely as a courier commission agent does perform any taxable service and the services provided by a collection centre, are not taxable in the category of photography service. - prima facie case in favor of assessee - stay granted.

Issues:
1. Recall of order directing deposit of service tax amount within six weeks.
2. Consideration of stay application No. 2216/2012 afresh.
3. Appeal against adjudication order confirming service tax liability.
4. Interpretation of whether the activity falls under taxable service of photography studio or agency.
5. Dispute regarding collection of photographic material and processing for service tax liability.
6. Application of CBEC Circular dated 27.12.2001 and subsequent withdrawal.
7. Argument on applicability of Circular based on existence of processing facility.
8. Analysis of the Circular's intention and its application to the case.
9. Consideration of extended period of limitation and taxpayer's reliance on Circular.
10. Grant of absolute waiver of liability and stay of further proceedings.

1. Recall of Order:
The judgment involves a Misc. Application for the recall of an order directing the deposit of the entire amount of service tax within six weeks. The application was made due to the petitioner's counsel's inability to appear on the specified date.

2. Stay Application Reconsideration:
The Tribunal decided to recall the previous order and consider the stay application afresh after hearing both parties' representatives.

3. Appeal Against Adjudication Order:
The appeal was filed against an adjudication order confirming a service tax liability, interest, and penalties under the Finance Act, 1994. The primary issue was whether the activity of the petitioner in collecting and processing photographic material is subject to service tax.

4. Interpretation of Taxable Service:
The central question revolved around whether the petitioner's activity falls under the taxable service of a photography studio or agency as defined in the relevant section of the Finance Act, 1994.

5. Dispute on Service Tax Liability:
The petitioner admitted to paying service tax on income related to manual enlargement but disputed the liability on income from collecting and processing photographic material. The adjudicating authority considered the withdrawn Circular and held the activity as taxable.

6. Application of CBEC Circular:
The judgment analyzed the CBEC Circular dated 27.12.2001, which provided guidance on the taxation of services related to photography. The Circular's interpretation played a crucial role in determining the tax liability.

7. Argument on Circular Application:
The respondent argued that the Circular's immunity applied only to collection centers without processing facilities, which did not align with the petitioner's situation, as they had their processing facility.

8. Circular's Intention and Application:
The Tribunal examined the Circular's intention and concluded that the petitioner's activity of collecting and forwarding photographic material did not constitute a taxable service under the Circular's provisions.

9. Extended Limitation Period and Circular Reliance:
The judgment discussed the taxpayer's reliance on the Circular for tax planning and the inapplicability of an extended limitation period due to such reliance during the Circular's validity.

10. Grant of Waiver and Stay:
Based on the analysis, the Tribunal granted an absolute waiver of the liability under the appellate order and stayed further proceedings pending the appeal's disposal.

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