2014 (8) TMI 264 - AT - Service Tax

Receipt of legal consultancy service for the purpose of obtaining patent rights from abroad - Classification of service as operational or administrative assistance amounting to Business Support Service - Held that - operational and administrative assistance were included in the category of Business Support Service only subsequently and during the period involved in this case, the definition did not include operational and administrative assistance. Activities can be better classified and more specifically covered by Legal Consultancy Service. However we also observe that appellant would be entitled to CENVAT credit of the entire tax paid and therefore extended period may not be invokable in this case at all. As regards the amount within the normal period, the situation would be revenue-neutral since the appellant would be entitled to CENVAT credit of the tax paid - prima facie case in favour of assessee - stay granted.

Summary

Issues Involved:
Service tax classification under Business Support Service, invocation of extended period, eligibility for CENVAT credit, waiver of pre-deposit and stay against recovery.

Service Tax Classification under Business Support Service:
The appellants were demanded service tax for services received from abroad categorized as Business Support Service. The appellants argued that operational and administrative assistance, which were part of the service, were not included in the definition of Business Support Service during the relevant period. The Commissioner classified the service under Business Support Service based on the nature of assistance provided. The Tribunal found that the activities were more appropriately covered under Legal Consultancy Service rather than Business Support Service. It was noted that the appellants were eligible for CENVAT credit of the entire tax paid, making the extended period invocation inappropriate. Consequently, the Tribunal waived the pre-deposit requirement and granted a stay against recovery during the appeal.

Invocation of Extended Period:
The appellants contended that the extended period should not have been invoked due to their eligibility for CENVAT credit of the entire amount paid. The Tribunal agreed, stating that since a substantial portion of the demand exceeded the normal period, the situation would be revenue-neutral as the appellants could avail CENVAT credit. Therefore, the extended period was deemed inapplicable, leading to the waiver of pre-deposit and the grant of a stay against recovery.

Eligibility for CENVAT Credit:
The appellants' eligibility for CENVAT credit of the entire amount paid was a crucial factor in the Tribunal's decision. It was highlighted that the appellants would be entitled to CENVAT credit of the tax paid, making the demand revenue-neutral. This factor played a significant role in the Tribunal's determination to waive the pre-deposit requirement and provide a stay against recovery during the appeal process.

Waiver of Pre-deposit and Stay Against Recovery:
Considering the appellants' argument regarding the classification of services and their eligibility for CENVAT credit, the Tribunal found a prima facie case for complete waiver of pre-deposit and granted a stay against recovery during the pendency of the appeal. The Tribunal's decision was based on the reclassification of the services under Legal Consultancy Service, the availability of CENVAT credit, and the revenue-neutral impact on the demand amount.