2014 (5) TMI 802 - AT - Service Tax

Waiver of pre-deposit - Business Auxiliary service - import of services - reverse charge - Held that - petitioner is a manufacturer and a 100% exporter of Guar Gum Powder and had engaged agents abroad for procuring export orders. Canvassing for export of the petitioners goods falls within the ambit of Business Auxiliary Service and since the service was received from abroad, the petitioner would be liable to remit service tax on the considerations remitted to foreign agents, under the reverse charge mechanism operationalised on introduction of Section 66A in the Finance Act, 1994 w.e.f. 18/04/06. Prior to this date, the petitioner would not be liable to remit tax under the reverse charge mechanism. Petitioner asserts before us that the services of foreign agents were availed prior to 18/04/06 but consideration for such services received was however remitted after 18/04/2006. The petitioner failed however to respond either to the show cause notice or notices for personal hearing - As and when petitioner files an application for receipt of additional evidence, the same would be considered and such evidence, if legitimately could be considered at the hearing of the appeal. For the nonce, since the petitioner has already remitted the assessed tax liability, we are inclined to grant waiver of pre-deposit on condition that the petitioner remits the component of the interest due on the quantum of the assessed tax, within four weeks - Conditional stay granted.

Summary

Issues:
Waiver of pre-deposit and stay of further proceedings regarding service tax demand under Sections 76 and 78 of the Finance Act, 1994.

Analysis:
The judgment addresses the appeal seeking waiver of pre-deposit and stay of proceedings following an adjudication order confirming a service tax demand of Rs. 4,90,00,499/- along with interest and penalties. The petitioner, a manufacturer and exporter of Guar Gum Powder, engaged foreign agents for export orders, falling under Business Auxiliary Service. The petitioner claimed that services were availed before 18/04/06 but consideration was remitted after that date. The petitioner failed to respond to notices but committed to providing documentary evidence supporting their claim. The counsel indicated evidence covering service tax liability of Rs. 3.69 crores only, with some invoices raised post-18/04/06. The Tribunal considered granting waiver of pre-deposit pending additional evidence submission. The petitioner was directed to remit the interest component within four weeks to waive the penal liability, with a stay on further proceedings.

The judgment emphasizes the importance of factual analysis of additional evidence to determine the petitioner's entitlement to relief. The Tribunal highlighted the need for a detailed examination of documentary evidence not yet submitted by the petitioner. The decision to grant waiver of pre-deposit was contingent upon the petitioner remitting the interest component within the specified timeline. Upon compliance, the penal liability related to the adjudication order was waived, and all further proceedings for realization of the assessed liability were stayed. The Tribunal disposed of the stay application, with the counsel present in court noting the order, ensuring the petitioner's understanding of their obligations. Compliance reporting was set for a specific date to monitor adherence to the judgment.