2013 (8) TMI 489 - AT - Service Tax

Business auxiliary services or Management, maintenance or repair service surface grinding of worn out cylinders - Held that - Applicant submission that their service should be classified as Management, maintenance or repair service has been given credence further pleaded that the entire nature of work is surface grinding of worn out cylinders in order to recondition/repair of worn-out cylinders submission of the learned counsel on applicability of tax on merit would be looked into at the time hearing. Pre- deposit of duty - the applicant has not made out a prima facie case for waiver of pre-deposit of the entire amount - applicant is directed to pre-deposit one fourth amount of duty on such submission the remaining amount would be waived and stay allowed application decided with conditions in the favour of the assessee.

Summary

Issues:
- Waiver of pre-deposit of service tax under Section 73(1) of the Finance Act, 1994
- Scope of the show-cause notice
- Classification of services under "Management, maintenance or repair service" vs. "Business Auxiliary Service"
- Modification of adjudication order by Commissioner (Appeals)
- Prima facie case for waiver of pre-deposit

Waiver of Pre-Deposit of Service Tax:
The applicant sought waiver of pre-deposit of service tax amounting to Rs.21,66,255 under Section 73(1) of the Finance Act, 1994, along with interest and penalties. The contention was that the order of the Commissioner (Appeals) exceeded the scope of the show-cause notice, and there was a demand for tax on merit. The adjudicating authority had initially confirmed the demand under "Business Auxiliary Service," but the Commissioner (Appeals) modified the order to classify the service under "Management, maintenance or repair service" from a specific date. The Tribunal found that the applicant did not establish a prima facie case for the waiver of the entire amount, directing them to pre-deposit Rs.5 lakhs within six weeks to stay the recovery during the appeal process.

Scope of Show-Cause Notice and Classification of Services:
The Revenue's representative argued that the applicant themselves had raised the issue of classifying the services under "Management, maintenance or repair service." The Tribunal noted that the applicant had initially claimed the work involved surface grinding of worn-out cylinders for reconditioning, suggesting an alternative classification as "Management, maintenance or repair service." The Commissioner (Appeals) modified the adjudication order to align with this classification, limiting the demand to a specific period. The Tribunal agreed with the Revenue's representative, indicating that the applicant's plea for waiver of pre-deposit lacked merit based on the submissions and facts presented.

Prima Facie Case for Waiver of Pre-Deposit:
Upon reviewing the impugned order and the applicant's submissions, the Tribunal concluded that the applicant had not established a strong prima facie case for the waiver of the entire amount of service tax, penalties, and interest. While the applicant had argued for the applicability of tax on merit, the Tribunal determined that further examination of this argument would occur during the appeal hearing. Consequently, the Tribunal directed the applicant to pre-deposit a specific amount within a set timeframe to suspend the recovery process during the pendency of the appeal, emphasizing the need for compliance by a specified date.