2014 (12) TMI 625 - AT - Service Tax

Waiver of pre-deposit - Receipt of internet telecommunication service - reverse charge mechanism - Internet Telecommunication Service - Held that - Service provided to the petitioner by M/s. Verizon falls within ITS. We notice that sub-clause (iii) of Section 65(57a) enumerates provisions of telecommunication services including fax, telephony, audio conferencing and video conferencing, over the internet as included within the defined taxable service ITS, by way of an inclusionary clause, explicating the ambit of the ITS. From the terms of the contract/agreement entered into between the global headquarter of the petitioner, incorporated at San Diego and M/s. Verizon, a copy of which is placed for our perusal by way of additional material papers filed along with the stay application, we are prima facie compelled to infer that M/s. Verizon provides telecommunication services to the petitioner facilitating fax, telephony and audio/video conferencing including over the internet, an activity clearly falling within the ambit of Section 65(57a) and clearly outside the ambit of Section 65(109a). We are not persuaded to the view that the impugned adjudication order suffers from any infirmity warranting eventual appellate interference or grant of full waiver of pre-deposit at this stage. - whole of service tax demand directed to be deposited - interest and penalty stayed - Partial stay granted.

Summary

Issues:
Waiver of pre-deposit and stay of further proceedings for realization of tax liability, interest, and penalties confirmed by the adjudication order.

Analysis:
The judgment concerns a stay application seeking waiver of pre-deposit and stay of proceedings for the confirmed tax liability, interest, and penalties by the Commissioner of Customs & Central Excise. The impugned order upheld a service tax demand of Rs. 71,49,653 along with interest and penalties under various sections of the Finance Act, 1994. The petitioner argued that the service received did not fall under Internet Telecommunication Service (ITS) but should be classified as Telecommunication service (TS) under different sections of the Act. The adjudication order, however, concluded that the service provided by M/s. Verizon fell within ITS, based on the contract/agreement between the petitioner and M/s. Verizon. The tribunal prima facie inferred that M/s. Verizon provided telecommunication services including fax, telephony, and audio/video conferencing over the internet, falling within the ambit of ITS and outside TS.

The tribunal found no infirmity in the adjudication order justifying appellate interference or full waiver of pre-deposit at that stage. The petitioner's consultant admitted to not asserting any plea or producing material before the adjudicating authority to establish that M/s. Verizon provided services through physical apparatus rather than the internet. The consultant expressed willingness to file additional pleadings and introduce additional evidence if such material is discovered. Consequently, the tribunal granted waiver of pre-deposit and stay of proceedings on the condition that the petitioner remits the entire service tax liability and corresponding interest within four weeks. Failure to comply would result in the dissolution of the stay and dismissal of the appeal for non-payment without further notice.

The judgment was dictated in court, and the petitioner's consultant was present to note the order, constituting sufficient intimation for compliance. The stay application was disposed of accordingly.