2014 (11) TMI 583 - AT - Service Tax

Business Support Service - appellant had been collecting the Bus Adda Fee, the amounts for sale of space for advertisement and also rent & Tehbazari - Extended period of limitation - Interest u/s 75 - Penalty u/s 77 & 78 - Held that - Perusal of Board s Circular No. 89/7.2006 dated 18.12.2006 reveals that it does have the potential to cause confusion that the public authority rendering service in public interest and charging fee for the same as per their statutory powers may not be liable to service tax although a careful reading of the said circular would reveal that it was referring to only such fees which are deposited in the Government account which is clearly not the case here. Further, though the Commissioner (appeals ) orders do not constitute precedence nor are they binding on CESTAT, the fact that some Commissioner (Appeals) have actually held such bus adda fee as not liable to service tax clearly supports the contention of the appellants that they were under the bona fide belief that the bus adda fee was not liable to service tax. Prima facie the appellants have been able to make out a fairly reasonable case with regard to the non-invocability of the extended period. In view of that and having regard to the fact that (i) the bus adda fee accounts for approximately 2/3rd of the impugned demand and (ii) the appellants had not contested the demand relating to sale of space for advertisement and rent & tehbazari we order a pre-deposit - Partial stay granted.

Summary

Issues Involved:
Service tax demand confirmation along with interest and penalties under Sections 75, 77, and 78 of the Finance Act, 1994. The applicability of service tax on bus adda fee collected by the appellants. The contention of suppression of facts by the appellants. Reference to CBEC Circular No. 89/7.2006 and judgments of Commissioner (Appeals) in similar cases. Pre-deposit requirement and stay of recovery during the appeal.

Analysis:

1. Service Tax Demand Confirmation: The appellants filed a stay application along with their appeal against the Order-in-Original confirming a service tax demand of Rs. 51,34,094 along with interest and penalties under relevant sections of the Finance Act, 1994. The demand was based on the collection of Bus Adda Fee, amounts for advertisement space sale, and rent & Tehbazari during a specific period.

2. Applicability of Service Tax on Bus Adda Fee: The appellants argued that the bus adda fee was a statutory levy and not for providing any service to a particular person, thus not liable to service tax. They referred to a CBEC Circular stating that activities by public authorities under law are statutory obligations and not taxable services. The appellants cited judgments where similar bus adda charges were held not liable to service tax.

3. Suppression of Facts Contention: The adjudicating authority found the appellants guilty of suppressing facts. The authority confirmed the service tax demand on the collected amounts, including bus adda fee, for advertisement space sale, and rent & Tehbazari. The authority noted the appellants did not contest the service tax demanded for advertisement space sale and rent & Tehbazari.

4. Pre-Deposit Requirement and Stay of Recovery: The Tribunal observed that the CBEC Circular might cause confusion but clarified that it referred to fees deposited in the Government account, which was not the case here. The Tribunal considered previous Commissioner (Appeals) orders, though not binding, supporting the appellants' belief that bus adda fee was not taxable. The Tribunal ordered a pre-deposit of Rs. 17 lakhs plus interest within four weeks, staying recovery during the appeal, subject to compliance by a specified date.

5. Conclusion: The Tribunal found the appellants had a reasonable case regarding the non-invocability of the extended period for demand. The pre-deposit amount was set, and recovery of remaining tax, interest, and penalties was stayed during the appeal. Non-compliance would lead to rejection of the appeal. The stay application was disposed of accordingly.