2014 (8) TMI 587 - AT - Service Tax

Waiver of pre-deposit of Service Tax - Business auxiliary services - export of services - Held that - Services rendered by the appellant is on specific appointment of him by the foreign buyers. It is also undisputed that the acceptance of the finished goods i.e. processed foods are done only on an approval/inspection done by the appellant. At this juncture, we find that prima facie, the services rendered by the appellant may get covered under BAS, as per the Board s Circular dated 24-2-2009, which specifically talks about the non-taxing of services, even when all the relevant activities though taking place in India, benefits of these services are accrued outside India. We find that the appellant has made out a prima facie case for the waiver of the pre-deposit of the amounts involved. Accordingly, application for the waiver of pre-deposit of the amounts involved is allowed and recovery thereof stayed till the disposal of appeal - Stay granted.

Summary

Issues:
- Service Tax liability on the appellant under the category of business auxiliary services.

Analysis:
The case involved a stay petition filed by the Appellant seeking the waiver of pre-deposit of Service Tax, interest, and penalties amounting to Rs. 14,54,629. The amounts had been confirmed by the adjudicating authority and upheld by the first appellate authority based on the appellant providing business auxiliary services during the period 2004-05 to 2008-09. The Appellant argued that the services provided, such as procurement of frozen seafood and pre-shipment inspection before export, fell under the category of export of services as the benefits accrued outside India to a foreign buyer. Reference was made to a Board's Circular and a previous case to support this argument. On the other hand, the Departmental Representative highlighted clauses in the agreement stating that the Appellant was appointed as an agent and had additional responsibilities beyond inspection.

Upon careful consideration of the submissions, the Tribunal found that the issue revolved around the Service Tax liability on the appellant for business auxiliary services. It was noted that the services were provided on specific appointment by foreign buyers, and the acceptance of goods was contingent on the appellant's approval or inspection. Referring to the Board's Circular from 2009, which addressed services accruing benefits outside India, the Tribunal concluded that the appellant had made a prima facie case for the waiver of pre-deposit. Consequently, the application for waiver was allowed, and recovery was stayed pending the appeal's disposal. The decision was dictated and pronounced in court by the Members.