2014 (10) TMI 595 - HC - Service Tax

Waiver of pre deposit - Business Support Service - petitioner was having two divisions, namely, Textile Division and Online Business Marketing Division ( SOBM ). In Textile Division, three units were engaged in multi level marketing of various types of goods. It was observed that SOBM were making payment of commission to their distributors after deduction of renewal fees and card charges; and the amount so deducted was taken as liable to service tax w.e.f. 2005-06 under the category of Business Support Service . - Held that - it would serve the cause of justice if the requirement of the order passed by the Appellate Authority is modified and the condition of pre-deposit is reduced to an amount of ₹ 13,61,321/- (thirteen lacs sixty one thousand three hundred twenty one), which has already been deposited by the petitioner. - stay granted.

Summary

Issues involved:
1. Challenge to the order of the Commissioner (Appeals-II) regarding the stay on recovery proceedings during the pendency of an appeal against the Order-in-Original.

Analysis:
1. The petitioner challenged the order dated 30.01.2014 by the Commissioner (Appeals-II) directing the deposit of service tax amounting to Rs. 27,22,638 within two weeks, with a stay on recovery of interest and penalty until the appeal's disposal. The appeal arose from an order dated 11.11.2011 by the Joint Commissioner, Central Excise, Jaipur, regarding service tax liability on commission payments made by the petitioner's Online Business Marketing Division. The Joint Commissioner ordered recovery of service tax, interest, and penalty.

2. The petitioner, in the appeal, had deposited 50% of the ordered amount before filing the writ petition. The petitioner contended that the activity did not attract service tax liability, causing undue hardship if forced to pay the demanded amount. The respondent's counsel supported the impugned order, citing it as a statutory requirement without the need for interference.

3. After considering both parties' submissions and the case records, the court noted the petitioner's arguable case and the potential for undue hardship. The court decided to modify the pre-deposit condition to prevent undue hardship. The court allowed the petitioner to proceed with the appeal without depositing the full principal demand amount.

4. The court clarified that the modification did not affect the merit consideration of the appeal. The order directed the petitioner to deposit the already paid amount of Rs. 13,61,321, and the Appellate Authority to schedule a hearing and proceed with the appeal accordingly. The court emphasized that the modification aimed to serve justice in the given circumstances without influencing the appeal's merit determination.