2014 (3) TMI 370 - AT - Service Tax

Classification of service - Business Auxiliary Services or rending of immovable property - Held that - As per the Franchise agreement, the appellant has rented out their premises to M/s Amalgamated Bean Coffee Trading Co. Ltd. along with certain facilities, for which the appellant received the consideration. Prima facie the activity undertaken by the appellant is one of renting of immovable property and not Business Auxiliary Services. In view of the above, we are of the view that the matter has to go back to the lower appellate authority for reconsideration of the entire issue on merits without insisting on any pre-deposit - Decided in favour of assessee.

Summary

Issues:
Classification of services provided by the appellant under 'Business Auxiliary Services' and the requirement of pre-deposit for appeal.

Analysis:
The judgment by the Appellate Tribunal CESTAT MUMBAI involved a case where the appellant, M/s HeeraLaxmi Amusement Pvt. Ltd., entered into an agreement with M/s Amalgamated Bean Coffee Trading Co. Ltd. The agreement included providing premises, infrastructure, electricity, water, and manpower supply in exchange for a minimum guaranteed amount or a percentage of the total monthly turnover. The department classified the services under 'Business Auxiliary Services' and demanded Rs.61,800 for a specific period. The lower appellate authority directed the appellant to make a pre-deposit of Rs.30,000, which was not complied with, leading to the dismissal of the appeal.

Upon reviewing the agreement, termed as a Franchise Agreement, the Tribunal observed that the appellant had rented out premises to M/s Amalgamated Bean Coffee Trading Co. Ltd. along with facilities, indicating a rental of immovable property rather than providing Business Auxiliary Services. Consequently, the Tribunal concluded that the matter should be reconsidered by the lower appellate authority without insisting on any pre-deposit, as the activity was deemed to be related to renting immovable property.

In the final decision, the Tribunal allowed the appeal by remanding the case back to the lower appellate authority for a thorough reconsideration of the issue on its merits without requiring any pre-deposit. The stay application was also disposed of in light of the reevaluation needed by the lower authority. The judgment was dictated and pronounced in court, providing clarity on the classification of services and the necessity of pre-deposit for appealing the decision.