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2009 (1) TMI 16 - AT - Service TaxApplicant, Managing Director and Director submits that the demand of tax for the period 1.4.03 to 31.3.05 under the category of Management Consultant . He submits that they have started paying tax from 1.9.04 under the category of Intellectual Property Services - submits that the tax is demanded on the amount paid by the applicant company to foreign based company, who provided services - prima facie, the case is covered by the Tribunal s LB decision in Hindustan Zinc Ltd. - Stay granted
Issues:
- Application for waiver of pre-deposit of tax and penalties - Tax demand under "Management Consultant" category - Payment to foreign company for services - Tax demand on payments to Directors Analysis: The case involved an application for waiver of pre-deposit of tax and penalties by the applicants. The tax demand was related to the period from 1.4.03 to 31.3.05 under the "Management Consultant" category. The appellant argued that they started paying tax from 1.9.04 under the category of Intellectual Property Services (IPR Services). The tax was demanded on payments made to a foreign-based company, M/s Denso, Japan, for services rendered. Additionally, tax was demanded on amounts paid to the Directors as incentives apart from their salaries. During the proceedings, the Jt. CDR reiterated the findings of the Commissioner and highlighted relevant portions of the agreement. It was mentioned that the demand on the Managing Director and Director was based on payments shown in the balance sheet for system up-gradation and development. After considering the arguments from both sides and examining the records, the Tribunal found that the key issue was whether the payments made to M/s Denso, Japan, without an office in India, were liable for tax. The Tribunal noted that the case was prima facie covered by a previous Larger Bench decision. The Tribunal decided to waive the pre-deposit of tax and penalties until the appeals were disposed of, indicating that the tax demand on the Directors would be addressed during the appeal hearings. In conclusion, the Tribunal allowed the stay applications, and the decision was dictated and pronounced in the open court.
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