2013 (10) TMI 813 - AT - Service Tax

Waiver of pre-deposit - service tax on advance received from foreign customers - denial of cenvat credit for non-maintenance of separate accounts - Rule 6(3) of CCR - Held that - it appropriate to grant waiver of pre-deposit and stay all further proceedings for realization of the adjudicated liability, on condition that the petitioner deposits Rs.30 lakhs, to the credit of Revenue within six weeks from today and reports compliance by 25.9.2013. - stay granted partly.

Summary

Issues: Waiver of pre-deposit and stay of further proceedings regarding service tax demand, denial of cenvat credit, and immunity to tax on advances received from foreign customers.

Waiver of Pre-deposit and Stay of Proceedings:
The appeal sought waiver of pre-deposit and stay of further proceedings related to the service tax demand confirmed by the adjudicating authority. The demand included various components such as unremitted balance, advance amounts from foreign customers, and denial of cenvat credit. The Tribunal considered the petitioner's arguments regarding the amendments to Section 67 of the Finance Act, 1994, and Notification No.3/2011 to support their claims for waiver. Ultimately, the Tribunal granted the waiver on the condition that the petitioner deposits a specified amount within a given timeframe.

Unremitted Balance and Associated Enterprises:
The Tribunal noted that the matter concerning unremitted balance for service provided to associated enterprises seemed to be in favor of the petitioner due to the amendment to Section 67 of the Finance Act, 1994. The Tribunal referenced a previous Final Order to support this conclusion.

Denial of Cenvat Credit:
Regarding the denial of cenvat credit due to non-maintenance of separate accounts, the petitioner relied on Notification No.3/2011 and subsequent amendments. The Tribunal considered the retrospective effect of these provisions and the petitioner's claim that the credit was validly availed.

Immunity to Tax on Advances from Foreign Customers:
The assessed liability related to advances from foreign customers for services provided or to be provided raised issues of tax immunity under the Export of Services Rules, 2005. The petitioner claimed that the advances were for exported services and therefore eligible for exemption. However, the adjudicating authority raised concerns about the lack of information and verification. The Tribunal acknowledged the petitioner's claims but refrained from making a definitive decision on tax immunity at that stage.

Compliance and Decision:
The Tribunal granted the waiver of pre-deposit and stay of proceedings with specific conditions for the petitioner to deposit a designated amount within a set timeframe. Failure to comply would result in rejection of the appeal. The Tribunal dismissed a related application seeking early hearing as no longer relevant. The petitioner was duly informed of their obligations under the order.

This detailed analysis of the judgment addresses the issues of waiver of pre-deposit, unremitted balance, denial of cenvat credit, and tax immunity on advances from foreign customers, providing a comprehensive overview of the Tribunal's decision and the legal considerations involved.