2014 (10) TMI 313 - AT - Service Tax

Business Support Service - Courier agency service - it is argued that when the service tax liability was discharged by the courier agency on the consideration received there is no separate tax liability on the franchisee in respect of the courier services provided by him to the courier agency. - Held that - Service tax regime in India operates on the principle that whosoever is rendering a taxable service is liable to discharge service tax liability on the consideration received. If the service received is an input service for the recipient of the service he can avail CENVAT credit of the service tax paid on the input service. The availability of CENVAT credit on the input service does not obliterate or negate liability to pay service tax on the input service. At every stage of rendering service or manufacture of goods the duty/tax liability has to be discharged and at the subsequent stage the credit of the duty/tax paid is taken. This is the premise on which the entire service tax regime at the Central level operates. appellant has not made out any prima facie case for complete waiver of pre-deposit adjudged against them. - stay granted partly.

Summary

Issues Involved:
Service tax demand on business support service rendered to postal department.

Analysis:
The appeal and stay petition were filed against Order-in-Appeal No. 289 dated 22/07/2013 passed by the Commissioner of Central Excise & Service Tax (Appeals-IV), Mumbai - I. The impugned order confirmed a service tax demand of Rs. 1,96,759/- along with interest on 'Business Support Service' provided by the appellant to the postal department. The appellant argued that since the postal department pays service tax on the speed post services, there should be no additional liability for the appellant. The appellant cited a case where a franchisee was not liable for service tax separately when the courier agency had already paid it. However, the Revenue contended that the appellant rendered business support service by canvassing speed post services for the postal department, for which they received a commission, and thus, service tax was applicable on this commission. The Tribunal noted that under the service tax regime, the liability to pay service tax arises for the one rendering the taxable service, irrespective of whether the recipient has paid tax on the input service. The Tribunal directed the appellant to make a pre-deposit of 50% of the confirmed service tax demand within eight weeks, with the balance to be waived upon compliance. The appeal was tagged for final hearing along with the Revenue's appeal on 12th November, 2014.