2014 (10) TMI 567 - AT - Service Tax

Waiver of pre deposit - Business Support service - Service of providing assured water infrastructure facility to the industries of Borai Industrial Growth Centre - Held that - during the concession period the appellants will own, operate and maintain the project and sell water to the corporation on agreed terms. Thus, the amounts received by the appellants are the sale proceeds of water and are not for rendering any service. Thus, prima facie, their activity does not fall under the category of Business Support Service. prima facie the appellants have made out a good case for waiver of pre-deposit. Therefore we waive the pre-deposit and order stay of recovery of impugned service tax, interest and penalty during the pendency of the appeal. - Stay granted.

Summary

Issues:
1. Whether the appellants are liable to pay service tax for providing Business Support Service.
2. Whether the appellants' activity falls under the category of Business Support Service.
3. Whether the appellants made out a case for waiver of pre-deposit.

Analysis:
1. The appellants were alleged to have provided Business Support Service to a corporation under a Build, Own, Operate and Transfer (BOOT) agreement. The demand of service tax was confirmed by the adjudicating authority, invoking the extended period. The appellants contested this allegation, arguing they did not provide any service to the corporation and that their activity did not fall under Business Support Service.

2. The Tribunal examined the agreement between the parties and found that the appellants were responsible for owning, operating, and maintaining a water supply project, selling water to the corporation on agreed terms. The Tribunal concluded that the amounts received by the appellants were for the sale of water and not for providing a service. Therefore, the Tribunal held that the appellants' activity did not fall under the category of Business Support Service, citing relevant case law and interpretation principles.

3. After considering the facts and submissions, the Tribunal found that the appellants had made a good case for waiver of pre-deposit. Consequently, the Tribunal waived the pre-deposit and ordered the stay of recovery of the impugned service tax, interest, and penalty during the pendency of the appeal.

This judgment highlights the importance of analyzing the nature of activities to determine the applicability of service tax and the significance of providing supporting evidence to substantiate claims for waiver of pre-deposit during legal proceedings.