2013 (8) TMI 492 - AT - Service Tax

Commission Agent u/s 65 (105) (zzb) or Business Auxiliary Services u/s 65(19)(v) Duty Dmand Interest and Penalty Waiver of pre-deposit - Revenue was of the view that the service rendered by the assesse was classifiable under Business Auxiliary Service u/s 65 (19) (v) - Held that - Assesse was providing service of effluent treatment and such service was classifiable as Business Auxiliary Service - The contention of the revenue that the activity undertaken by the assesse was covered by the expression used in section 65 (19) (v) was tenable prima facie there was no scope for a different understanding - the contention to look at the legislative history and read too many words into the legislation to give a different meaning could not be accepted - after considering the financial difficulties submitted, to strike a balance of convenience of the interest of both the parties assesse was directed to make a pre-deposit of 25lakhs upon such submission rest of the duty to be waived till the final disposal Decided partly in favor of assesse.

Summary

Issues:
Interpretation of Business Auxiliary Service under section 65 (19) of the Finance Act, 1994 for effluent treatment services provided by the applicant to another company. Whether the consideration received for such services rendered is taxable under the said provision. Applicability of extended period for demand of service tax. Financial hardship claimed by the applicant.

Analysis:

Issue 1: Interpretation of Business Auxiliary Service for effluent treatment services
The Tribunal analyzed whether the effluent treatment services provided by the applicant to another company fall under the definition of Business Auxiliary Service as per section 65 (19) of the Finance Act, 1994. The applicant argued that there was no value addition in treating effluents and that the service tax proposed to be levied was not sustainable. However, the Revenue contended that the effluents were goods processed by the applicant to prevent environmental damage, thus constituting a service under the said provision. The Tribunal found force in the Revenue's argument and held that the applicant was providing a service of effluent treatment classifiable as Business Auxiliary Service.

Issue 2: Applicability of extended period for demand of service tax
The applicant claimed that they were under a bona fide belief that the activity was not taxable and that there was no intention to evade payment of duty, thus challenging the invocation of the extended period for demand of service tax. The Revenue argued that the charges for effluent treatment were not disclosed and could only be detected through an audit, justifying the use of the extended period. The Tribunal found the question of the time-bar debatable but ultimately directed the applicant to make a pre-deposit for admission of appeal, considering the financial difficulties submitted.

Issue 3: Financial hardship claimed by the applicant
The applicant pleaded financial hardship as a ground for waiver of pre-deposit of dues arising from the impugned order. The Tribunal, after considering the arguments on both sides, directed the applicant to make a pre-deposit of a specified amount within a given period for admission of appeal. The Tribunal balanced the convenience of both parties by granting a waiver of pre-deposit of the balance dues and stayed the collection of such dues during the pendency of the appeal.

In conclusion, the Tribunal upheld the demand of service tax on the effluent treatment services provided by the applicant, directed a pre-deposit for admission of appeal, and granted a waiver of pre-deposit of balance dues along with a stay on collection during the appeal process, considering the financial difficulties claimed by the applicant.