2014 (6) TMI 64 - AT - Service Tax

Waiver of pre deposit - Short payment of Service Tax - Take over of company - Held that - though M/s. Satcom Network had been taken over by the appellant, Service Tax liability in respect of the value of the services provided was not being fully discharged. However, if during the years in respect of which the exemption under Notification No. 6/2005-S.T. as sought to be denied to the appellant and Service Tax is demanded, they would be entitled for Cenvat credit in respect of input services. However, even if the Cenvat credit in respect of input service is allowed, there would be some net Service Tax demand. In view of this, this is not the case for total waiver - Conditional stay granted.

Summary

Issues:
1. Service Tax liability of the appellant for cable network services.
2. Short payment of Service Tax detected by Central Excise officers.
3. Appeal against the order confirming Service Tax demand, interest, and penalties.
4. Stay application for waiver of pre-deposit of Service Tax demand, interest, and penalty.

Analysis:

1. The appellant provided taxable cable network services and had taken Service Tax registration under the voluntary disclosure scheme in 2004. They acquired M/s. Satcom Network in September 2002. The Central Excise officers found a short payment of Service Tax amounting to Rs. 21,152/- for the period from 1-7-2004 to 31-3-2005. Additionally, a further short payment of Rs. 3,12,156/- for the period from 2005-2006 to 2007-2008 was detected. The Jurisdictional Deputy Commissioner confirmed a total Service Tax demand of Rs. 3,33,308/- along with interest and penalties under Sections 76, 77, and 78.

2. The appellant appealed to the Commissioner (Appeals) against the order-in-original, which was subsequently dismissed. The appellant then filed an appeal along with a stay application. The appellant argued that a significant portion of the Service Tax demand was related to M/s. Satcom Network for a period before its acquisition, and they should be entitled to Cenvat credit for input services, reducing their net liability. The Departmental Representative opposed the stay application, supporting the findings of the Commissioner (Appeals).

3. The Tribunal considered both sides' submissions and reviewed the records. It was noted that while the appellant could claim Cenvat credit for input services, there would still be a net Service Tax demand. Therefore, total waiver of the pre-deposit was not warranted. The Tribunal directed the appellant to deposit Rs. 50,000 within eight weeks from the date of the order. Compliance was to be reported by 5th December 2011.

This detailed analysis outlines the Service Tax liability issues, the short payment detected, the appeal process, and the Tribunal's decision regarding the stay application and pre-deposit requirement.