2014 (10) TMI 521 - AT - Service Tax

Waiver of pre deposit - providing smart card based driving licence and paper based learning licence on behalf of Government of Maharashtra - Business Auxiliary Service/Business Support Service - Held that - As issuance of the driving licence by the applicant on behalf of the Government of Maharashtra prima facie is not an activity of business, therefore, the same does not qualify under Business Auxiliary Service/Business Support Service. In these circumstances, the applicants have made out a case for complete waiver of pre-deposit - Stay granted.

Summary

Issues:
Service tax demand under Business Auxiliary Service/Business Support Service for the period 26.11.2006 to March 2012.

Analysis:
The judgment delivered by Appellate Tribunal CESTAT Mumbai pertains to a case where service tax demand was confirmed against the applicants for providing smart card-based driving licenses and paper-based learning licenses on behalf of the Government of Maharashtra. The issue revolved around whether such activities qualified as Business Auxiliary Service/Business Support Service under section 65(19) clause (vi) of the Finance Act, 1994. The counsel for the applicants argued that since issuing driving licenses is a statutory function of the government and not a business activity, the demands were not sustainable, and waiver of pre-deposit was requested.

Upon considering the submissions, the Tribunal, led by Ashok Jindal, observed that the issuance of driving licenses by the applicant on behalf of the government did not constitute a business activity. Therefore, the activities did not fall under the ambit of Business Auxiliary Service/Business Support Service. Consequently, the Tribunal ruled in favor of the applicants, granting a complete waiver of the pre-deposit requirement for the service tax, interest, and penalty amount. The recovery of the said amounts was also stayed during the pendency of the appeals, ensuring relief for the applicants during the legal proceedings.

This judgment highlights the importance of distinguishing between statutory functions performed on behalf of the government and commercial business activities when determining the applicability of service tax under relevant provisions of the Finance Act, 1994. The decision showcases the Tribunal's adherence to the legal framework and its commitment to providing relief to taxpayers when the activities in question do not align with the taxable services specified under the law.