2013 (10) TMI 1017 - AT - Service Tax

Provision of services to SEZ - exemption by way of refund mechanism - non payment of service tax - Notification no. 9/2009-ST dated 3-3-2009 - Held that - when only during the gap of 2 months the appellant did not pay the Service Tax and it was available as refund to the recipient, the question of having any intention to evade duty does not arise and therefore the Show Cause Notice issued on 19-10-2010 to recover the Service Tax from 3-3-2009 to 20-5-2009 was time-barred. Under these circumstances, the extended period could not have been invoked and penalty could not have been imposed and further legally also, it can be argued that the intention of the Government was to provide exemption and tax could not have been demanded during the relevant period. - stay granted.

Summary

Issues:
Waiver of pre-deposit of service tax, interest, and penalties under Finance Act, 1994 based on Notification No. 9/2009-ST for SEZ developers or units.

Analysis:
The appellant filed a stay petition seeking the waiver of pre-deposit of Rs. 27,63,672/- along with interest and penalties under various sections of the Finance Act, 1994. The dispute arose from the supersession of Notification No. 4/2004-ST by Notification No. 9/2009-ST, which required service providers to pay service tax on services rendered to SEZ units, with the SEZ unit being able to claim a refund. The Revenue contended that the appellant failed to pay service tax during the relevant period and was therefore liable for service tax, interest, and penalties. The appellant argued that a similar issue was considered by the Bench in a previous case and a waiver was granted unconditionally. The departmental representative acknowledged the similarity of the issue with the previous case.

Upon considering the submissions from both sides, the Tribunal found the issue to be identical to the one in the previous case. Referring to the previous order, the Tribunal noted that the appellant's failure to pay service tax during the interim period was due to an oversight on the part of the Government, and the situation was revenue-neutral as the recipient could claim a refund. The Tribunal agreed with the view taken in the previous case and concluded that the appellant had made a case for the waiver of pre-deposit. Consequently, the application for the waiver was allowed, and the recovery of the amounts involved was stayed pending the disposal of the appeal.

In summary, the Tribunal granted the appellant's request for the waiver of pre-deposit of service tax, interest, and penalties under the Finance Act, 1994, based on the interpretation of Notification No. 9/2009-ST regarding service tax obligations for SEZ developers or units. The decision was influenced by a previous case where a similar issue was considered, leading to the Tribunal's conclusion that the appellant had valid grounds for the waiver due to the unique circumstances surrounding the payment of service tax during the relevant period.