2013 (11) TMI 1070 - AT - Service Tax

Waiver of pre deposit - Business Auxiliary Service - Exemption Notification 8/05-ST - On perusal of the agreement, it appears that the applicant supplied man power for rendering the service to M/s. Sree Ram Fibres Ltd. In view of that, applicant failed to make out a prima facie case for waiver of predeposit of entire amount of tax along with interest and penalty - Stay granted partly.

Summary

Issues:
- Application for waiver of predeposit of tax
- Classification of services under Business Auxiliary Service or Man Power Supply Agency Service
- Examination of the agreement and its operation

Analysis:
1. The applicant filed an application seeking the waiver of predeposit of tax amounting to Rs.13,95,497/- along with interest and penalty. The dispute revolved around the classification of services provided by the applicant to M/s. Sree Ram Fibres Ltd. The applicant claimed that the services fell under Business Auxiliary Service as per section 65(19) of the Finance Act, 1944, and were exempted under Notification 8/05-ST dated 1.3.05. However, the Revenue contended that the services should be classified as Man Power Supply Agency Service under section 65(68) of the Act. The applicant, a proprietorship firm facing financial hardship and losses, emphasized the need for the waiver.

2. Upon examination of the agreement between the applicant and M/s. Sree Ram Fibres Ltd., it was observed that the applicant provided manpower for the services rendered. The Tribunal noted that a detailed analysis of the agreement and its operation was necessary to determine the correct classification of the services. Based on the preliminary review, the Tribunal concluded that the applicant had not established a prima facie case for the complete waiver of the predeposit amount. Consequently, the Tribunal directed the applicant to make a deposit of Rs.4,20,000/- within six weeks. Upon compliance with this directive, the predeposit of the remaining tax, interest, and penalty would be waived, and recovery stayed during the appeal process. The applicant was instructed to provide a compliance report by a specified date.

3. In summary, the Tribunal's decision highlighted the importance of a thorough examination of the agreement to ascertain the nature of the services provided by the applicant. The ruling emphasized the need for a partial deposit by the applicant while indicating the possibility of waiver for the remaining amount subject to compliance. The judgment underscored the significance of substantiating the claim for waiver through a detailed assessment of the agreement and its operational aspects.