2014 (8) TMI 504 - AT - Service Tax

Stay or order - commissioner (Appeals) had decided in favor of assessee - Inclusion of Inspection Expenses in other income received and shown in miscellaneous receipts in the Profit and Loss Account - Held that - Prima facie, the department has not satisfactorily dislodged the finding that the inspection is done in order to ensure bona fide nature of the claim and can at best be called safety measures prior to lending money and thus would not constitute rendering of any service to anyone else except to itself and that it is not the case of the department that the fee collected is excess of actual expenditure incurred for carrying out such inspection or that there is a commission contained in the inspection charges. Similarly, the department has not raised any prima facie argument against the finding that compensatory finance charges and processing fee is not service rendered to anyone else, that the interest received by the assessees is for the delay between date of disbursement of money to the supplier and the date of receipt by the customer and it is not the case of the department that the fee collected is in excess of the actual interest collectable or that there is a commission contained therein. Since no prima facie case has been made out by the Revenue for exercise of the inherent power of the Tribunal to grant stay - Stay denied.

Summary

Issues:
1. Stay of operation of orders of the Commissioner (Appeals) regarding liability of "Inspection Expenses" and "Compensatory finance charges and processing fee" to service tax for 2006-07 and 2007-08.

Analysis:
The judgment pertains to the Revenue seeking a stay of operation of orders by the Commissioner (Appeals) concerning the liability of "Inspection Expenses" and "Compensatory finance charges and processing fee" to service tax for the years 2006-07 and 2007-08. The Tribunal considered the arguments presented by both sides. The Tribunal observed that the department failed to dislodge the finding that inspections were conducted to ensure the authenticity of claims and were essentially safety measures before lending money, not constituting a service to anyone else except the assessees themselves. It was noted that the department did not argue that the fees collected exceeded the actual expenses incurred for inspections. Similarly, the Tribunal found that compensatory finance charges and processing fee were not services rendered to others, as the interest received by the assessees was for the delay between money disbursement and customer receipt, with no indication of excessive fees or commissions. As the Revenue did not establish a prima facie case for the Tribunal to exercise its inherent power to grant a stay, the applications were dismissed. The order was pronounced and dictated in open court by the Tribunal.

This judgment highlights the importance of establishing a prima facie case when seeking a stay of operation of orders related to tax liabilities. The Tribunal emphasized that mere assertions by the Revenue were insufficient to warrant a stay, as demonstrated by the failure to challenge the findings regarding the nature of inspections and finance charges. The judgment underscores the need for concrete evidence and legal arguments to support requests for stays in tax matters, ensuring that decisions are based on substantive legal grounds rather than mere assertions.