2014 (11) TMI 502 - AT - Service Tax

Waiver of pre deposit - Business Auxiliary service - services in relation to manufacture and processing of goods by the applicant to M/s. SKOL Breweries Ltd. - applicant has merged with M/s. SKOL Breweries Ltd. with effect from 31.03.2009 - Held that - Effective date of the merger is on 31.03.2009. Therefore, the question of rendering service by the applicant to M/s. SKOL Breweries Ltd. does not arise. In these circumstances, the applicant has made out a case for complete waiver of pre-deposit. - Stay granted.

Summary

Issues:
- Waiver of pre-deposit of service tax confirmed and penalties imposed
- Interpretation of merger date for liability of service tax under 'Business Auxiliary Service'

Analysis:
The judgment revolves around the issue of seeking a waiver of pre-deposit of service tax confirmed and penalties imposed, specifically in the context of a merger date determining liability under 'Business Auxiliary Service'. The applicant's contention was based on the merger with another entity, arguing that they cannot render service to themselves post-merger. The Revenue, however, opposed this, highlighting the appointed date of the merger and the subsequent completion of formalities. The Hon'ble Bombay High Court's order was crucial in establishing the effective date of the merger as 31.03.2009. The Tribunal, after considering both sides' submissions, concluded that the applicant had a valid case for complete waiver of pre-deposit. Consequently, the Tribunal granted the waiver of pre-deposit of the entire amount of service tax, interest, and penalty, staying the recovery thereof. The judgment also directed the registry to tag the appeal for hearing with another related appeal.

This judgment clarifies the significance of the effective date of a merger in determining liability for service tax under the 'Business Auxiliary Service' category. It underscores the importance of legal formalities and the specific date of merger as per the Hon'ble Bombay High Court's order. The Tribunal's decision to grant a complete waiver of pre-deposit was based on the clear establishment of the merger date and the consequent lack of requirement for the applicant to render service to the merged entity. The judgment provides a comprehensive analysis of the merger's legal implications on service tax liabilities, emphasizing the need for accurate interpretation of merger dates in such cases.