2014 (1) TMI 312 - AT - Service Tax

Waiver of pre-deposit of service tax - Partial payment made by assessee - Reverse charge mechanism - Held that - as per the International Finance Corporation (Status, Immunities and Privileges) Act, 1958, the duties and taxes are exempted. In view of this, we find that the amount already deposited is sufficient for hearing of the appeal. Pre-deposit of the remaining dues is waived and recovery of the same is stayed during the pendency of the appeal - Stay granted.

Summary

Issues:
- Application for waiver of pre-deposit of service tax
- Confirmation of demand on reverse charge mechanism
- Exemption of services from International Finance Corporation
- Payment already made by the applicant
- Reliance on previous stay order

Analysis:
The judgment pertains to an application for the waiver of pre-deposit of service tax amounting to Rs. 1,74,64,742, interest, and penalties. The demand was confirmed on the reverse charge mechanism due to the applicant availing external commercial borrowings from specific entities. The applicant contended that services received from one of the entities, International Finance Corporation, were exempt from duties and taxes under the International Finance Corporation (Status, Immunities and Privileges) Act, 1958. The applicant argued that since the services were provided by International Finance Corporation and were exempted, they should not be liable to pay service tax on a reverse charge mechanism. Additionally, the applicant had already paid a significant amount of Rs. 1,29,47,131 towards the dues. The applicant also cited a stay order in a similar case to support their argument.

The Tribunal examined the provisions of the International Finance Corporation (Status, Immunities and Privileges) Act, 1958, and acknowledged that duties and taxes are indeed exempted for services provided by the International Finance Corporation. Consequently, the Tribunal found that the amount already deposited by the applicant was sufficient for the appeal's hearing. Therefore, the Tribunal decided to waive the pre-deposit of the remaining dues and stayed the recovery of the same during the pendency of the appeal. Ultimately, the stay petition was allowed, providing relief to the applicant in this matter.

This judgment underscores the significance of understanding and applying relevant legal provisions, such as the International Finance Corporation Act, to determine the tax liabilities of entities involved in transactions. It also highlights the Tribunal's discretion to waive pre-deposit requirements based on the merits of the case and the amount already deposited by the applicant. The reliance on previous stay orders and legal precedents further strengthens the applicant's argument and demonstrates the importance of legal precedents in tax matters before the Tribunal.