2015 (4) TMI 216 - AT - Service Tax

Business Support Service or Telecom Service - Overseas company providing dedicated leased lines - Classification controversy involving interpretation of law - Appellant for the material period April 2009 to March 2010 discharged tax liability in respect of Telecom service - Held that - It is clearly mentioned therein that for the period April 2009 to March 2010, the service tax payable has been calculated in respect of Telecom service and paid. Even though the dispute is about 'business support service', in the order as well as in the documents, it comes out clearly that 'telecom service' has been considered as 'business support service' and therefore, the payment can be related to the adjudication order. Accordingly, we agree with the appellant that the amount paid by them can be considered towards the dues in this case - Partial stay granted.

Summary

Issues:
1. Taxability of payments made to foreign companies for leased lines under "Business Auxiliary Services"
2. Taxability of services received under "Management Agreement" from group companies located abroad
3. Reversal of wrongly availed Cenvat credit
4. Interpretation of statute regarding tax liability on operational or administrative assistance
5. Consideration of amount paid by the appellant towards tax dues

Analysis:
1. The case involved demands totaling over Rs. 7 crores for payments made to a foreign company for leased lines and services received under a management agreement. The appellant argued that the demands were not sustainable, citing a precedent in Infosys Ltd. vs. CST where it was held that the service in question was not taxable. The Tribunal found merit in the argument and noted that the appellant had already paid a significant amount under protest for the normal period, which was deemed sufficient given the dispute over service classification.

2. Regarding the demand for services received under the management agreement, the appellant contended that prior to a certain date, the assistance received in management was not liable to tax. The Tribunal acknowledged the argument, finding prima facie force in it. Additionally, the Tribunal considered the appellant's payment for telecom services and agreed that it could be related to the adjudication order, thereby allowing the amount paid to be considered towards the dues in the case.

3. The Tribunal addressed the issue of wrongly availed Cenvat credit amounting to Rs. 95,226. The appellant was directed to deposit Rs. 1,00,000 within a specified period, and compliance was to be reported by a certain date. Subject to this deposit, the requirement of pre-deposit of the balance dues was waived, and a stay against recovery was granted during the pendency of the appeal.

In conclusion, the Tribunal ruled in favor of the appellant on the taxability issues related to payments made to foreign companies and services received under the management agreement. The Tribunal also provided a directive regarding the wrongly availed Cenvat credit, allowing for a partial deposit and granting a stay against recovery pending the appeal process.