2014 (9) TMI 834 - AT - Service Tax

Waiver of pre deposit - CENVAT Credit - Revenue denies the service tax element reimbursed to the dealer to be claimed as input credit - Reimbursement of service tax as Input service tax - Held that - there is no strong evidence to repel the argument of the learned Counsel as to deposit of service tax by the dealers. No doubt, the same service provided by dealers that ought to have been provided by principal, should not be subjected to double taxation. Accordingly, prima facie, following the order passed by the Tribunal in the case of Samsung India Electronics Pvt. Ltd. vs. CCE, Noida 2009 (7) TMI 1073 - CESTAT NEW DELHI , there shall be waiver of requirement of pre-deposit during pendency of appeal - stay granted.

Summary

Issues:
Claim for set off of taxes paid by dealers against tax liability of the appellant; Denial of input credit for service tax element reimbursed to the dealer.

Analysis:

1. The primary contention of the appellant was that post-sale services provided through dealers have already incurred tax, which was paid into the treasury by the dealers on behalf of the principal. The appellant sought to set off these taxes paid against their tax liability. However, the Revenue denied this claim. The appellant clarified that the service tax was specifically paid for after-sale services related to goods sold by the principal, and the dealers were merely acting on behalf of the principal. The Revenue did not dispute this arrangement but contested the input credit claimed by the dealer for the service tax element reimbursed to them.

2. The representative for the Revenue argued that the taxes paid by the dealers were distinct from those of the principal, indicating a separation in tax liabilities between the two entities. However, at this interim stage, the Tribunal found no compelling evidence to counter the appellant's assertion regarding the deposit of service tax by the dealers. Recognizing the principle that the same service should not be subject to double taxation, the Tribunal referred to a previous order in the case of Samsung India Electronics Pvt. Ltd. vs. CCE, Noida 2009, where a waiver of pre-deposit requirement was granted during the appeal process. Consequently, the Tribunal decided to grant a waiver of the pre-deposit requirement in the present case as well, pending the final resolution of the appeal.

3. The Tribunal's decision to waive the pre-deposit requirement during the appeal process signifies a preliminary acknowledgment of the appellant's argument regarding the tax treatment of post-sale services provided through dealers. By referencing a relevant precedent, the Tribunal emphasized the need to avoid double taxation on the same service and indicated a favorable stance towards the appellant's claim for set off of taxes paid by the dealers. This interim ruling provides temporary relief to the appellant and sets the stage for further examination and resolution of the complex tax issues involved in the case.

This detailed analysis of the judgment highlights the key arguments presented by the parties, the Tribunal's evaluation of the evidence and legal principles, and the interim decision reached regarding the waiver of pre-deposit requirement.