2008 (1) TMI 322 - AT - Service Tax

Services of Security Agencies - - admitted liability of Rs. 28.21 lakhs has been deposited application for waiver for balance amount of Rs. 28,67,548 and penalties - on the ground that certain elements are not includible - Appellants have also filed Income-tax Returns to show that they are faced with severe financial hardship - appellants is directed to pre-deposit an amount of Rs. 10,00,000 within a period of four months from today

Summary

Issues:
1. Pre-deposit requirement of Service Tax amount and penalties on services of Security Agencies.
2. Eligibility for deductions on certain activities not falling under Service Tax.
3. Claim of holding a bona fide belief regarding exemption.
4. Financial hardship leading to a request for waiver of balance amounts and penalties.

Analysis:

1. The appellant was directed to pre-deposit a Service Tax amount of Rs. 56,88,806, including penalties, for Security Agencies services from October 2000 to September 2005. They had pre-deposited Rs. 28,21,258 and sought a waiver for the balance amount of Rs. 28,67,548 and penalties. The appellant argued for deductions on activities like maintaining gardens and utilizing drivers and cooks, claiming they were not taxable under Service Tax. The Commissioner did not consider these pleas, leading to the appeal for waiver based on financial constraints.

2. The opposing party contended that the liability for Service Tax was clear, as the appellant fell under the category of 'Security Services.' They emphasized the need for pre-deposit in the interest of revenue, mentioning the recovery of fake bills issued by the appellant. The appellant's request for waiver was challenged based on the clarity of their tax liability.

3. The Tribunal observed that the admitted amount of Rs. 28.21 lakhs had been deposited by the appellant. While the appellant sought a waiver citing certain non-taxable elements, they failed to specify the exact deductible amounts. Income-tax Returns were presented to demonstrate financial hardship. Considering the circumstances, the Tribunal directed the appellant to pre-deposit Rs. 10,00,000 within four months. Failure to comply would lead to appeal dismissal. Upon this deposit, the balance of duty and penalties would be waived, and recovery stayed until appeal disposal.

This detailed analysis covers the issues of pre-deposit requirements, eligibility for deductions, bona fide belief claims, and financial hardship leading to a waiver request in the legal judgment delivered by the Appellate Tribunal CESTAT, Bangalore.