2014 (10) TMI 522 - AT - Service Tax

Waiver of pre-deposit - Business Auxiliary Service - applicant agreed to promote, endorse NKID products through artist - Held that - product in question are not goods as per section 2(7) of the Sale of Goods Act, 1930. Therefore, the levy of service tax under the category of Business Auxiliary Service is not sustainable. In these circumstances, the applicant has made out a case for complete waiver of pre-deposit - Stay granted.

Summary

Issues:
1. Waiver of pre-deposit of the impugned demand under Business Auxiliary Service.

Analysis:
The judgment involves the issue of the applicant seeking waiver of pre-deposit of the demand confirmed against them under the category of Business Auxiliary Service. The applicants had an agreement with a company and a celebrity to promote various products, including residential and commercial complexes, luxury hotels, infrastructure projects, amusement park, and educational institutes. The revenue department considered the promotion of these goods as falling under Business Auxiliary Service, making them liable for service tax. The applicant argued that the goods promoted were immovable property, not goods as defined in the Sale of Goods Act, 1930. They contended that service tax could only be demanded under 'Brand promotion' service, not Business Auxiliary Service. The applicant also highlighted that a similar activity by the artist was classified as brand promotion service, not Business Auxiliary Service, resulting in the dropping of proceedings against the artist.

The tribunal, after hearing the arguments, found merit in the applicant's contention that the products in question did not qualify as 'goods' as per the Sale of Goods Act, 1930. Therefore, the levy of service tax under the category of Business Auxiliary Service was deemed unsustainable. Consequently, the tribunal granted a complete waiver of pre-deposit for the entire amount of service tax, interest, and penalty, and stayed the recovery during the appeal's pendency. The judgment focused on the interpretation of the term 'goods' under the Sale of Goods Act, 1930, and the distinction between Business Auxiliary Service and Brand promotion service for determining the applicability of service tax in the given scenario. The decision provided relief to the applicant by waiving the pre-deposit and halting the recovery process until the appeal was resolved.