2014 (8) TMI 474 - AT - Service Tax

Waiver of demand of pre-deposit of Service Tax - Failure to maintenance of separate accounts for input services utilized for exempted services - assessee submits that they are selling the products and also paying VAT and the sale is on consideration and that there is no service as such is involved in the said sales activity - Held that - sales activity of applicant in respect of products manufactured by them on payment of VAT cannot be treated as rendering any exempted services. Further, previous Stay Order has been made on voluntary offer to pre-deposit an amount of ₹ 25/- lakhs. - Stay granted partly.

Summary

Issues: Waiver of demand of pre-deposit of Service Tax, treatment of sales activity as exempted service, failure to maintain separate accounts for input services, disagreement on pre-deposit amount

In this judgment by the Appellate Tribunal CESTAT BANGALORE, the issue involved was the application seeking waiver of demand of pre-deposit of Service Tax amounting to Rs. 1,32,17,756/- along with interest and penalty of Rs. 2,000 for the period April 2008 to March 2009. The demand was related to the sale of air-conditioners treated as "trading activity," leading to the conclusion that the applicant failed to maintain separate accounts for input services utilized for exempted services, resulting in the confirmed demand.

The advocate for the petitioner argued that the sales activity involved selling products with VAT payment, emphasizing that it was a consideration-based sale without any service element. On the other hand, the JCDR representing the respondent pointed out that a Stay Petition for an earlier period had been disposed of after ordering a pre-deposit.

After considering the submissions and records, the Tribunal found that the sales activity of the applicant, involving products manufactured with VAT payment, could not be considered as providing exempted services. The Tribunal also noted that in a previous Stay Order, a voluntary pre-deposit of Rs. 25 lakhs was made, contrasting it with the present case where the advocate did not offer any pre-deposit and strongly contested the demand on merits.

The Tribunal, prima facie, agreed with the advocate's submissions, holding that a case for waiver of dues was established as per the impugned order. Consequently, the Tribunal ordered the waiver of dues as per the impugned order and stayed the recovery until the appeal's disposal. Additionally, the appeal was linked to another case and scheduled for a future hearing.