2013 (10) TMI 914 - AT - Service Tax

Service tax liability - Banking and financial services - reverse charge - Held that - appellant had paid no commission to the foreign banks for receiving banking and financial services but had made payments only to an Indian bank. Prima facie, there was no material on record before the adjudicating authority to legitimise such an inference - waiver of pre-deposit and stay of all further proceedings pursuant to the adjudication order as confirmed by the order of the Commissioner (Appeals) is granted, on condition that the appellant remits the assessed tax component plus interest thereon as due, within 6 weeks from today and reports compliance by 26-09-2013. - stay granted in respect of penalty.

Summary

Issues: Service tax liability confirmation, Penalty imposition, Applicability of judicial decisions, Waiver of pre-deposit

Service Tax Liability Confirmation:
The C.C.E. (Appeals) confirmed the service tax liability of Rs.4,61,015/- as adjudicated, which included penalties and interest. The Appellate Tribunal found no error in the classification of services under the reverse charge mechanism for banking, financial services, and exhibition services. The assessment covered the period from 31-03-2007 to 31-03-2009, invoking the extended period of limitation under the proviso to section 73(1) of the Finance Act, 1974.

Penalty Imposition:
The adjudicating authority had imposed penalties along with interest, which were also confirmed by the C.C.E. (Appeals). However, the Appellate Tribunal focused on the correctness of the service classification and the applicability of relevant judicial decisions in determining the liability.

Applicability of Judicial Decisions:
The appellant's counsel cited various Tribunal decisions and a Karnataka High Court decision to support the claim for a waiver of pre-deposit. The Tribunal acknowledged these judgments but emphasized that the appellant needed to prove that no commission was paid to foreign banks for receiving banking and financial services, only to an Indian bank. Without sufficient evidence on record before the adjudicating authority, the Tribunal found it difficult to legitimize the appellant's claim based solely on the cited decisions.

Waiver of Pre-Deposit:
After a prima facie analysis, the Tribunal granted a waiver of pre-deposit and stayed further proceedings contingent upon the appellant remitting the assessed tax component plus interest within six weeks. The waiver excluded the penalty component. Failure to comply with the remittance and reporting requirements by the specified deadline would result in the rescission of the waiver and dismissal of the appeal for pre-deposit failure. The Tribunal disposed of the application accordingly, setting clear conditions for compliance.

This detailed analysis of the judgment highlights the key issues of service tax liability confirmation, penalty imposition, the relevance of judicial decisions, and the conditions for the waiver of pre-deposit as determined by the Appellate Tribunal.