2014 (1) TMI 821 - AT - Service Tax

Waiver of pre-deposit of service tax - Security service - Held that - applicant are providing security service for consideration to Food Corporation of India, we find that applicant has not made out a fit case for total waiver of Service tax demand - Conditional stay granted.

Summary

Issues:
Waiver of pre-deposit of service tax demand amounting to Rs. 6,33,645 for the period January 2008 to July 2010 due to the nature of services provided by the applicant.

Analysis:
The applicant sought a waiver of pre-deposit of service tax demand totaling Rs. 6,33,645 for providing security services during the period from January 2008 to July 2010. The applicant contended that they are home guards discharging statutory duties under the Punjab Home Guards Act, 1947, and therefore, should not be liable to pay service tax as they are not providing any taxable service. The Revenue, however, relied on an ad hoc Exemption Order clarifying the tax liability of entities providing security services. The Order specified that the Central Industrial Security Force (CISF) is liable to service tax for providing security services to Public Sector Undertakings and State Governments. The Revenue calculated the applicant's tax liability post-March 31, 2009, to be around Rs. 3,20,000.

The Tribunal, after considering the facts and circumstances of the case, found that the applicant, who was providing security services to the Food Corporation of India for a consideration, did not make a compelling case for a total waiver of the service tax demand. Consequently, the Tribunal directed the applicants to deposit Rs. 3,00,000 within eight weeks. Upon depositing this amount, the pre-deposit of the remaining service tax penalty would be waived until the appeal's final disposal. The Tribunal set a compliance deadline of April 11, 2013, for the deposit to be made, ensuring that the partial waiver would take effect.

This judgment highlights the importance of assessing the nature of services provided and the applicability of service tax based on the specific statutory framework governing the activities of the service provider. It underscores the need for entities to adhere to tax regulations even when performing statutory duties, emphasizing the significance of complying with tax obligations to avoid disputes and penalties.