2014 (10) TMI 456 - AT - Service Tax

Waiver of pre deposit - Business auxiliary service - Imposition of Penalty - SSI exemption - benefit of duty exemption under Notification 6/2005-ST dated 01/03/2005 - Held that - For computing the eligibility to the exemption under Notification 6/2005-ST, as amended, the turnover of the taxable service, whether exempted or otherwise, have to be taken into account. If this is done, it seen that the appellant had crossed the exemption limit of ₹ 8/10 lakhs as the case may be. In these circumstances, the finding of the lower appellate authority cannot be faulted. However, considering the fact that the appellant is an APMC rendering services in the field of agriculture predominantly and also keeping in mind the financial hardship pleaded, we direct the appellant to make a pre-deposit of ₹ 1 lakhs within a period of eight weeks and report compliance by 08/09/2014. On such compliance, pre-deposit of the balance of dues adjudged against the appellant shall stand waived and recovery thereof stayed during the pendency of the appeal - Partial stay granted.

Issues:
1. Confirmation of service tax demand against the appellant.
2. Interpretation of duty exemption under Notification 6/2005-ST.
3. Consideration of turnover for exemption eligibility.
4. Financial hardship faced by the appellant.
5. Pre-deposit requirement and stay of recovery during appeal.

Confirmation of service tax demand against the appellant:
The appeal and stay petition were filed against an Order-in-Appeal confirming a service tax demand of Rs. 2,82,090 against the appellant, along with interest and a penalty. The lower appellate authority upheld the demand, setting aside the adjudicating authority's order. The appellant, M/s. Shrigonda Krushi Utpanna Bazar Samiti, appealed against this decision, citing financial difficulties in paying the amount.

Interpretation of duty exemption under Notification 6/2005-ST:
The Revenue argued that the issue revolved around the duty exemption under Notification 6/2005-ST. The appellant provided two services: business auxiliary service and renting of immovable property service. While the business auxiliary service was exempt under Notification 14/2004-ST due to its relation to agriculture, the renting of immovable property service did not enjoy such exemption. The adjudicating authority mistakenly exempted the appellant from service tax liability based on the turnover of the renting service alone, overlooking the aggregate turnover requirement for exemption eligibility.

Consideration of turnover for exemption eligibility:
The Tribunal agreed with the Revenue that both taxable and exempted service turnovers must be considered for exemption eligibility under Notification 6/2005-ST. As the appellant's combined turnover exceeded the exemption limit, the lower appellate authority's decision was deemed correct. However, considering the appellant's role as an APMC in agricultural services and their financial hardship, the Tribunal directed a pre-deposit of Rs. 1 lakh within eight weeks, with the balance of dues waived upon compliance and recovery stayed during the appeal.

Financial hardship faced by the appellant:
The appellant highlighted their financial challenges in meeting the substantial demand confirmed by the lower appellate authority. Despite the absence of representation during the hearing, the appellant's stay application emphasized their inability to pay the amount and requested a stay until the appeal's final disposal.

Pre-deposit requirement and stay of recovery during appeal:
In light of the appellant's financial situation and the nature of their services in agriculture, the Tribunal directed a pre-deposit of Rs. 1 lakh within eight weeks. Upon compliance, the balance of dues would be waived, and recovery stayed during the appeal process, providing relief to the appellant while ensuring compliance with the tax liability.

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