2008 (2) TMI 279 - AT - Service Tax

Management Consultancy Services and Repair and Maintenance - assessee did not pay Service Tax on charges realised from the customers and accounted for under the head Reimbursements in their Balance Sheet - Prima facie, in view of cited judgments, appellants are not required to pay Service Tax on rent, salary of employees, etc. commissioner is not justified in not considering the judgments cited by assessee suppression not proved stay application is allowed

Summary

Issues Involved:
1. Demand of Service Tax on reimbursements under 'Management Consultancy Services' and 'Repair and Maintenance'.
2. Applicability of judgments on reimbursements not being subject to service tax.
3. Time bar defense based on the knowledge of facts by the Department.
4. Validity of demands and extended period invocation by the Commissioner.

Analysis:
1. The judgment dealt with the demand for Service Tax and penalties on reimbursements under 'Management Consultancy Services' and 'Repair and Maintenance'. The appellants were required to pre-deposit a substantial amount, which the Revenue Intelligence demanded based on charges realized from customers but not accounted for as Service Tax. The appellants argued that reimbursements for rent, employee salaries, and incentives were not part of the taxable services they provided. The Commissioner, however, confirmed the demands, citing non-disclosure to the Department and invoking a larger period.

2. The appellants heavily relied on various judgments to support their defense against the Service Tax demands on reimbursements. They presented cases like Scott Wilson Kirkpatric Pvt. Ltd., B.S. Refrigeration Ltd., and Malabar Management Services Pvt. Ltd., where it was held that reimbursements of expenses are not subject to service tax and not includible in the value of taxable services. The Tribunal noted that the Commissioner's order lacked a detailed analysis of these judgments and did not provide reasons for disregarding their applicability, indicating a strong case for the appellants on merits.

3. The appellants also raised the defense of time bar, asserting that the Department was aware of all relevant facts, making the demands time-barred. They cited multiple judgments such as T.N. Dadha Pharmaceuticals and Tamil Nadu Housing Board to support their argument that demands based on information available in the balance sheet are not sustainable by invoking an extended period of limitation. The Tribunal found merit in this argument, indicating a lack of suppression of information by the appellants.

4. The Tribunal observed that the Commissioner's order lacked a detailed reasoning on both the merits of the case and the time bar defense raised by the appellants. The Tribunal found that the appellants had a strong case based on the cited judgments and the lack of suppression of information. Consequently, the Stay application was allowed, waiving the pre-deposit requirement and staying the recovery until the disposal of the appeals. The Tribunal emphasized that there should be no recovery even after the expiry of the Stay Order, considering the significant revenue involved, and scheduled an expedited hearing for the matter.

This comprehensive analysis of the judgment highlights the key issues, arguments presented by the parties, relevant legal precedents, and the Tribunal's decision, providing a detailed overview of the case.