2015 (9) TMI 785 - AT - Service Tax

Support Service of Business or Commerce - hiring of the transponder capacity in the satellite - up linking services - Infrastructural Support Services - Held that - Tribunal in the case of Air Liquid North India Pvt. Ltd. 2011 (12) TMI 412 - CESTAT, NEW DELHI , relying upon the Apex Court s judgment in the case of Godfrey Philip India v. State of UP. 2005 (1) TMI 391 - SUPREME COURT OF INDIA held that while interpreting the scope of the expression Support Service of Business & Commerce under Section 65(105c) and also of the term Infrastructural Support Service in Explanation to Section 65(104c), the principle of noscitura-sociis would be applicable and accordingly the expression Support Service of Business or Commerce as defined under Section 65(104c) would cover only the service which are of supporting nature to the main business like services relating to Custom relationship, evaluation of prospective customers, tele-marketing distribution and logistics, transaction, processing, office infrastructure, etc., and would not cover the servicer of renting of machinery and equipment for production or manufacture which is an activity relating to conduct of the main business. Prima facie view that the hiring of transponder capacity by the appellant in the satellite of M/s. B.T. Singapore Pte. Ltd. for the purpose of their business of providing up linking service to their customers would not be covered by the expression Support Service of Business or Commerce under Section 65(104c). - Stay granted.

Summary

Issues:
1. Whether the hiring of transponder capacity by the appellant from a foreign service provider is taxable as "Infrastructural Support Service" under the Finance Act, 1994.
2. Whether the appellant is liable to pay Service Tax under reverse charge mechanism for the services received.
3. Whether the appellant has a strong prima facie case to waive the requirement of pre-deposit for the Service Tax demand, interest, and penalty.

Analysis:
1. The appellant, engaged in DTH services, hired transponder capacity from a foreign service provider for up linking services. The Department claimed this as "Infrastructural Support Service" taxable under the Finance Act. The Commissioner upheld the demand, penalties, and interest. The appellant argued that the hiring did not fall under "Support Service of Business or Commerce" as defined in the Act. The Tribunal, citing precedents, found the hiring not covered under the definition, as it related to the main business activity. The Tribunal ruled in favor of the appellant, waiving the pre-deposit requirement and staying recovery.

2. The Department contended that the hiring of transponder capacity constituted a "Support Service of Business or Commerce" under the Act, necessitating Service Tax payment under reverse charge mechanism. The appellant argued against this, citing the nature of the service and the location of the transponders. The Tribunal, applying legal principles and interpretations, found in favor of the appellant, stating that the hiring did not qualify as a taxable service. The requirement of pre-deposit was waived, and recovery stayed pending appeal.

3. The appellant sought a waiver of the pre-deposit requirement for the Service Tax demand, interest, and penalty. The Department opposed, citing the nature of the service and non-disclosure. The Tribunal, after considering arguments from both sides and examining the agreements, found in favor of the appellant. The Tribunal determined that the appellant had a strong prima facie case, leading to the waiver of the pre-deposit requirement and staying recovery until the appeal's disposal.