2015 (6) TMI 18 - AT - Service Tax

Business Auxiliary Service - Invocation of extended period of limitation - Activity of Handling of finished goods - Held that - Prima-facie, we find that on more or less similar activities, the Applicant had challenged the earlier Work Order before the Hon ble Gauhati High Court, which was quashed on the ground of limitation. No-doubt, the earlier service tax demand was issued under the category of Cargo Handling Services , but prima-facie, we find that the activities, which the Applicant rendered under both these Work Orders, are more or less similar in nature. Therefore, prima facie, at this stage, it would be difficult to accept the contention of the Revenue that subsequent show-cause notice issued on 17.04.2012 invoking extended period of limitation would sustain, when the earlier show-cause notice, was quashed on the ground of limitation by the Hon ble High Court. In the result, the Applicant could able to make out a prima-facie case for requirement of predeposit of all dues adjudged is waived and its recovery is stayed during pendency of appeal - Stay granted.

Summary

Issues Involved:
Application for waiver of predeposit of service tax, penalty under Sections 78, 77(1)(a), and 77(2) of the Finance Act, 1994. Dispute over classification of services as "Business Auxiliary Services" and invocation of extended period of limitation for demand notices.

Analysis:

1. Waiver of Predeposit and Penalty Imposed:
The application sought waiver of predeposit of service tax amounting to Rs. 58.32 lakhs and penalties imposed under Sections 78, 77(1)(a), and 77(2) of the Finance Act, 1994. The appellant contended that the services provided were related to "Handling of finished goods" and disputed the classification under "Business Auxiliary Services." The appellant highlighted that a previous demand notice was quashed by the Gauhati High Court due to limitation issues. The Revenue argued that the subsequent demand notice was valid since no new contract had been entered into after 2007. The Tribunal found that the activities under both work orders were similar and prima facie accepted the appellant's argument that the subsequent notice invoking extended period of limitation was not sustainable after the earlier notice was quashed on limitation grounds. Consequently, the Tribunal allowed the stay petition and waived the predeposit of all dues during the appeal's pendency.

2. Classification of Services as "Business Auxiliary Services":
The dispute revolved around the classification of services provided by the appellant as "Business Auxiliary Services." The appellant contended that no specific sub-clause of Business Auxiliary Service was referred to in confirming the demand. Despite believing they were not liable to pay service tax, the appellant registered and paid the tax to avoid harassment. The Revenue argued that since the appellant voluntarily started discharging service tax from a certain date, the argument that the activities did not fall under Business Auxiliary Services was not acceptable. The Tribunal, however, focused on the similarity of activities under different work orders and the previous legal ruling on limitation issues, leading to the waiver of predeposit and stay on recovery during the appeal.

3. Invocation of Extended Period of Limitation:
The case involved the invocation of the extended period of limitation for demand notices issued by the Revenue. The appellant challenged the validity of the subsequent notice based on the earlier notice being quashed by the Gauhati High Court due to limitation issues. The Revenue argued that since no new contract had been entered into after 2007, the subsequent demand notice was not barred by limitation. The Tribunal, after considering the similarity of activities and the legal precedent of the earlier ruling, found in favor of the appellant, allowing the waiver of predeposit and staying the recovery of dues during the appeal process.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved, the arguments presented by both parties, and the Tribunal's decision based on the legal principles and factual circumstances of the case.