2014 (2) TMI 340 - AT - Service Tax

Demand of service tax - Cenvat Credit - Reverse Charge mechanism - Held that - appellant has registered himself in association who is situated in abroad and has paid the subscription fees - if the appellant is required to pay service tax on such charges paid, he is eligible to avail Cenvat credit on such service tax paid by them, as the appellant is undisputedly a manufacturer of excisable goods - prima facie, the appellant has made out a case on this point itself for the waiver of pre-deposit of the amounts involved. Accordingly, the application for the waiver of pre-deposit of amounts involved is allowed and recovery thereof stated till the disposal of appeal - Stay granted.

Summary

Issues:
Waiver of pre-deposit of service tax liability under Reverse Charge Mechanism.

Analysis:
The judgment pertains to a stay petition filed for the waiver of pre-deposit of service tax liability confirmed by the adjudicating authority, interest, and penalties under the Reverse Charge Mechanism. The appellant argued that they are liable to discharge the service tax liability under Section 66A. The appellate tribunal considered the demand of service tax for a specific period and the show cause notice issued to the appellant. It was noted that the issue was arguable, focusing on the appellant's registration with an association abroad and payment of subscription fees. The Revenue's contention was that the appellant was liable to pay service tax under the Reverse Charge Mechanism. However, the tribunal observed that if the appellant is required to pay service tax on such charges, they are entitled to avail Cenvat credit as a manufacturer of excisable goods. This raised the question of Revenue neutrality. The tribunal found that prima facie, the appellant had made a case for the waiver of pre-deposit based on this point alone. Consequently, the application for the waiver of pre-deposit was allowed, and recovery was stayed until the appeal's disposal.

This judgment highlights the importance of considering the applicability of the Reverse Charge Mechanism in service tax liability cases. It emphasizes the eligibility of the appellant to avail Cenvat credit if required to pay service tax, particularly in the context of being a manufacturer of excisable goods. The concept of Revenue neutrality was also crucial in the tribunal's decision to grant the waiver of pre-deposit. The analysis underscores the significance of a strong legal argument and prima facie case in seeking relief from pre-deposit requirements pending appeal proceedings.