2015 (12) TMI 441 - AT - Service Tax

Demand of service tax - Global Account Manager (GAM), expenses and International Private Leased Circuit (IPCL) charges. - the amounts paid in foreign exchange which are alleged to be for Online Information and Data Base Access and Retrieval Service - Held that - As regards levy of service tax on the amount paid am IPCL charges which are the appellants share of the expenses incurred by their holding company on setting up and maintaining a Private Leased Circuit linking the holding company with all its subsidiary companies all over the world including the appellant, the Board vide its Circular dt. 19.12.11 has clarified that while this service is specifically covered by the Telecommunication service, it would not attract service tax, as the same has not been provided by Telegraph Authority, andas per section 65(105)(zzzx) read with section 65 109a(iv) , this service would be taxable only when the same has been provided by the Telegraph Authority. This circular also clarifies that this service cannot be classified as Business Support Service. The correctness or otherwise of the Board Circular can be examined only at the stage of final hearing. Accordingly we hold that in respect of service tax demand on IPCL charges, the appellant have strong prima facie case in their favour. As regards the service tax on GAM expenses being paid by the appellant to their holding company, we find force in the appellants contention that this service is of the nature of Operational or Administrative Assistance in any manne which was brought within the definition of Business Support Service as given under section 65(104c) w.e.f. 01.05.11. Accordingly during period prior to 01.05.11, prima facie, this service would not be taxable as Business Support Service. As regards the service tax demand of ₹ 33,64,008/- on alleged receipt of online information and Data Base and Access Retrieval Service, prima facie we are of the view that no evidence in this regard have been produced by the Department. - appellant has strong prima facie case in their favour. As regards alleged short payment of service tax of ₹ 1,71,456/- in April 07, the Appellant plea is that this amount of service tax had been paid without waiting for receipt of consideration towards service. Prima facie, the Appellant s plea appears to be correct -appellant have been able to establish prima facie case in their favour - Stay granted.

Summary

Issues:
Service tax liability on Global Account Manager (GAM) expenses and International Private Leased Circuit (IPCL) charges paid by the appellant to their holding company, liability for online information and data base access or retrieval service, alleged non-payment of service tax on cargo handling services, appeal against service tax demand, interest, and penalties imposed by the Commissioner, stay applications.

Analysis:
1. Service Tax on GAM Expenses and IPCL Charges:
The Department contended that GAM expenses and IPCL charges paid by the appellant to their holding company are taxable under Business Auxiliary Service and Business Support Service, respectively. The appellant argued that prior to 01.05.11, these services were not taxable. The Tribunal held that IPCL charges are not taxable as Business Support Service per a Board Circular. Regarding GAM expenses, the Tribunal found that the service did not fall under Business Auxiliary Service and that the appellant had a strong prima facie case.

2. Online Information and Data Base Access or Retrieval Service:
The Department alleged that the appellant received this service and owed service tax. However, the appellant provided evidence that the payments were for different services unrelated to online data access. The Tribunal found in favor of the appellant, stating they had a strong case against this service tax demand.

3. Cargo Handling Services and Alleged Non-Payment:
The Department claimed non-payment of service tax on cargo handling services for specific periods. The appellant argued that the service tax had been paid and the allegation was incorrect. The Tribunal found in favor of the appellant's argument, indicating a prima facie case in their favor.

4. Appeal Against Commissioner's Order:
The Commissioner had imposed service tax demands, interest, and penalties on the appellant, which led to the filing of appeals. The Tribunal considered the submissions from both sides and found that the appellant had established a prima facie case. Consequently, the requirement of pre-deposit was waived, and recovery stayed pending appeal disposal.

5. Stay Applications:
The Tribunal allowed the stay applications, considering the appellant's arguments and the prima facie case established in their favor. The requirement of pre-deposit for service tax demand, interest, and penalties was waived until the appeal's final disposal.