2015 (12) TMI 220 - AT - Service Tax

Waiver of pre deposit - Business Support service - whether the appellant has to discharge service tax on charges made by them on STP units for certification of exports on the basis of SOFTEX forms submitted by the exporters and various other functions performed in exercise of the powers conferred to them under Foreign Trade Policy such as increase in value of capital goods, capacity enhancement, permit for broad-banding, authorize change in name, permit change of location, extend validity of LOP, permit mergers, issue of green card, cancellation of LOP, etc - Held that - Prima facie the issue is debatable and we also find that there could be some merits in the claim of the appellant that they are performing statutory functions and the same cannot be considered as business support activities. Certification of SOFTEX forms in terms of statutory requirement which is recognized by other Departments can be considered as Business Support Service or not is a very debatable point. Moreover, there is some merit in the claim that Business Support Service definition needs to be considered in greater detail and their activity is not covered by the same. Recognizing the fact that appellant is an autonomous society and established by Government of India, managed by Government of India and is performing several statutory functions, prima facie, we consider that appeal can be heard without insisting on pre-deposit. Accordingly, we waive the requirement of pre-deposit and grant stay against recovery during the pendency of appeal. - Stay granted.

Summary

Issues:
Whether the appellant, an autonomous society under the Societies Registration Act, 1860, is liable to pay service tax on charges for certification of exports and other functions provided to Software Technology Park (STP) units under the STP scheme.

Analysis:
The appellant, established to promote the STP scheme, provides various services to STP units, including certification of exports based on SOFTEX forms. The dispute arose regarding the liability to pay service tax on these charges, leading to a demand of Rs. 5,15,53,520 for the period 2007-08 to 2011-12, along with penalties.

The Department argued that the appellant's activities fall under Business Support Service, as they assist software exporters, and cited the withdrawal of a relevant circular. It was noted that the appellant operates under the STP scheme, providing services for a fee, and is not a government department. The Department contended that the fees collected are not compulsory levies and are not deposited into the Government Treasury.

The appellant argued that their functions are statutory under the Foreign Trade Policy and Foreign Exchange Management Act, and they act as an agent of the RBI for certifying SOFTEX forms. They claimed that the fees collected are controlled by the Ministry of Electronics and Information Technology, indicating statutory functions.

The Tribunal found the issue debatable, acknowledging the appellant's performance of statutory functions and the potential exclusion from Business Support Service. Recognizing the appellant's autonomous status and statutory functions, the Tribunal waived the pre-deposit requirement and granted a stay on recovery during the appeal process.