2014 (12) TMI 664 - AT - Service Tax

Waiver of pre-deposit - Business Auxiliary Service - Service of providing JP miles to trade partners - Held that - Applicants are selling the JP miles to their business partners and business partner is providing JP Miles free of cost to their customers for availing free tickets from the applicant. In these circumstances, we are not convinced by the argument of the learned A.R that the applicant is providing any business service to their business partners and remuneration received towards sales of JP Miles by the applicant is not covered under the Business Auxiliary Service. For the remaining demands the applicant has paid substantial amount. In these circumstances we waive the requirement of pre-deposit of the balance service tax, interest and penalties and stay recovery thereof during the pendency of the appeal. - Stay granted.

Summary

Issues:
1. Waiver of pre-deposit of service tax along with interest and penalties.
2. Interpretation of Business Auxiliary Service in relation to the issuance of JP Miles.
3. Whether the applicant is promoting the business of their business partners or selling JP Miles to them.
4. Sustainability of service tax demand under the category of Business Auxiliary Service.

Analysis:
1. The judgment revolves around the applicant's request for the waiver of pre-deposit of service tax, interest, and penalties amounting to a significant sum. The main demand is related to Business Auxiliary Service, particularly concerning the issuance of JP Miles by the applicant to their business partners and customers.

2. The disagreement arises from the interpretation of the nature of the service provided by the applicant. The revenue contends that the JP Miles are given free of cost by the business partner, implying that the applicant is promoting the business of the partners. This interpretation leads to the confirmation of service tax demand under the Business Auxiliary Service category.

3. The applicant's argument is that they are selling JP Miles to their business partners, who then provide these miles to their customers for availing free tickets from the applicant. The applicant asserts that they are not promoting the business of their partners but engaging in a commercial transaction by selling JP Miles.

4. After hearing both sides, the Tribunal, led by Justice Ashok Jindal, concludes that the applicant is indeed selling JP Miles to their business partners, and the remuneration received for these sales does not fall under the ambit of Business Auxiliary Service. The Tribunal finds the argument presented by the revenue unsustainable and decides to waive the requirement of pre-deposit for the remaining service tax, interest, and penalties, staying the recovery during the appeal process.

This detailed analysis of the judgment highlights the key issues addressed by the Tribunal, focusing on the interpretation of Business Auxiliary Service and the nature of the transaction involving the issuance of JP Miles.