2014 (12) TMI 456 - AT - Service Tax

Waiver of predeposit - E-publishing services - Held that - There is no dispute on the fact that appellant is engaged in providing of E-publishing services to overseas customers. Part of the services like, copy editing, indexing, project management outsourced to the overseas customer which is squarely covered under Import of Services . The remittance of foreign currency is not under dispute. The above activities particularly the project management outsourced relates to managing specified E-publishing project given by the customer efficiently. We find that appellant had initially contested before the adjudicating authority that their services were covered under IT services and the adjudicating authority held that their activity does not fall under Information & Technology Services . However, the appellant in the present appeal advanced their contentions under Business Auxiliary Service under clause (vi) as provision of services on behalf of the client before the Tribunal for the first time. Considering the nature of services and also considering the fact that the appellant has initially contested that Information & Technology services before the adjudicating authority and now they are contesting under Business Auxiliary Service, the appellants have prima facie not made out a case for total waiver of predeposit. - Partial stay granted.

Summary

Issues Involved:
1. Application for waiver of predeposit and stay of recovery of service tax demand, interest, and penalty against the order passed by the Commissioner of Central Excise, Puducherry.

Analysis:
1. The appellant, a 100% EOU engaged in providing pre-publishing activities, filed an application seeking waiver of predeposit and stay of recovery of service tax demand, interest, and penalty. The service tax demand of Rs. 1,84,12,730/- along with interest and penalty was imposed under the category of "Business Support Services" under reverse charge mechanism by the Commissioner of Central Excise. The appellant outsourced part of their work to overseas service providers and made foreign remittances for various expenses related to rendering services. The adjudicating authority confirmed the service tax amount, appropriated a partial payment made by the appellant, and imposed penalties. The appellant contended that the services provided by the overseas service providers fell under "Business Auxiliary Service" rather than "Business Support Service" as classified by the authorities.

2. The appellant argued that the services rendered by their overseas service providers were in the nature of job work covered under "Business Auxiliary Service." They claimed that their activities did not fit the definition of "Business Support Service" as outlined in the Finance Act. The appellant also highlighted previous tribunal decisions supporting their classification. The appellant further contended that they were entitled to full credit and refund as their activities qualified as "Export of Services," ensuring revenue-neutrality.

3. The respondent countered the appellant's arguments by stating that the services provided by the appellant were correctly classified as "Business Support Service" and not "Information Technology Services." The respondent emphasized that the definition of "Business Support Service" was broad and inclusive, covering various activities related to business support. The respondent pointed out that the appellant had not raised the classification under "Business Auxiliary Service" before the adjudicating authority but only contested the classification under "Information Technology Services."

4. After hearing both sides, the Tribunal noted that there was no dispute regarding the appellant's engagement in providing E-publishing services to overseas customers. The Tribunal acknowledged that part of the services outsourced to overseas providers fell under "Import of Services." The Tribunal observed that the appellant initially contested the classification under "Information Technology Services" but later argued for classification under "Business Auxiliary Service." The Tribunal concluded that the appellant had not established a case for a total waiver of predeposit and directed them to make a predeposit of Rs. 70,00,000 within eight weeks. The Tribunal allowed adjustment of the amount already paid by the appellant against the predeposit amount, subject to verification by the department.

5. In conclusion, the Tribunal ordered the appellant to make a predeposit, adjusted against the amount already paid, and granted a stay on the recovery of the balance tax, interest, and penalty pending the appeal's disposal. The appellant was instructed to report compliance by a specified date, ensuring the verification of the deposited amount by the jurisdictional Divisional Office.