2016 (1) TMI 849 - AT - Service Tax

Waiver of pre-deposit - import of services - Held that - While it may be arguable that the service provided by the Representative Offices of the appellant to the appellant would amount to import of service in view of Explanation -1 to Section 66A (2) of the Finance Act, 1994, at this interlocutory stage, in view of the above quoted observation of CESTAT in the case of Torrent Pharmaceuticals Ltd., the appellant deserves waiver of pre-deposit - Stay granted.

Summary

Issues:
1. Stay application filed by the Revenue against order-in-original for not confirming interest under Section 75 of the Finance Act, 1994.
2. Stay application filed by the appellant assessee against service tax demand confirmed under Business Auxiliary Services and Tour Operator Service for the period 2004-2005 to 2011-2012.
3. Contention regarding demands under Business Auxiliary Services and Tour Operator Service based on show cause notices.
4. Interpretation of expenses incurred in Foreign Exchange by the appellant in relation to Representative Offices located abroad.
5. Legal analysis of demands under Tour Operator Services and Business Auxiliary Services based on previous judgments.

Analysis:

1. The Revenue filed a stay application against an order-in-original for not confirming interest under Section 75 of the Finance Act, 1994. The Tribunal dismissed the stay application, deeming it mis-conceived due to the primary adjudicating authority's failure to confirm the interest on the demand.

2. The appellant assessee filed a stay application against a service tax demand confirmed under Business Auxiliary Services and Tour Operator Service for the period 2004-2005 to 2011-2012. The demands were based on multiple show cause notices covering different categories of services and specific amounts for each notice.

3. The Tribunal analyzed the demands under Business Auxiliary Services and Tour Operator Service. It was noted that a previous CESTAT order had set aside a show cause notice related to Tour Operator Service demand for outbound tours. The appellant argued that Foreign Exchange expenses were not liable to service tax based on a judgment involving similar expenses incurred by another entity.

4. The dispute regarding Foreign Exchange expenses revolved around whether these expenses were related to the appellant's Representative Offices abroad. The Department argued that the expenses were not directly linked to the Representative Offices but to freelance marketing representatives in key markets. The Tribunal considered both arguments.

5. The Tribunal delved into the legal aspects of the demands under Tour Operator Services and Business Auxiliary Services. It cited a CESTAT judgment regarding the treatment of Foreign Exchange expenses and the applicability of service tax in cases where services are provided to one's own establishment. Ultimately, the Tribunal granted a complete waiver from pre-deposit and stayed the recovery of the liabilities during the appeal's pendency based on the analysis of the issues presented.

This comprehensive analysis of the judgment highlights the key issues addressed by the Tribunal concerning the stay applications, service tax demands, interpretation of expenses, and legal precedents impacting the final decision.