2016 (3) TMI 1051 - AT - Service Tax

Waiver of demand - Business Support Services - Space booking for ocean freight - Appellant contended that excess amount if any recovered from the exporters as ocean freight cannot be treated as providing of Business support services - Held that - by relying on the various decisions of co-ordinate bench, appellant has made out a prima facie case for complete waiver of demands with respect to taxability on ocean freight for exports. Admissibility of CENVAT Credit - Appellant has already deposited an amount of ₹ 25.00 Lakh through challan and ₹ 7.72 by way of reversal of credit - Held that - applicant has already paid an amount of ₹ 32.72 Lakh through challan and reversal of CENVAT Credit regarding demand of CENVAT Credit, and is also agitating the issues on merits. Therefore, such deposit shall be considered sufficient for granting stay. - Stay granted

Summary

Issues Involved:
1. Stay application against Order-in-Original confirming demand, interest, and penalties.
2. Disallowance of CENVAT Credit under rule 14 and penalty under Rule 15.
3. Taxability on ocean freight for exports.
4. Prima facie case for waiver of demands.
5. Granting stay on remaining amounts, interest, and penalties.

Analysis:

1. The appellant filed a stay application against Order-in-Original confirming a demand of Rs. 7,15,04,131/-, interest, and penalties under Section 77 & 78 of the Finance Act, 1994. Additionally, CENVAT Credit of Rs. 41,02,573 was disallowed under rule 14 with an equivalent penalty under Rule 15 of the CENVAT Credit Rules, 2004.

2. The appellant argued that they had already deposited a partial amount towards the demand of CENVAT Credit and were contesting the issue of admissibility of the credit on its merits.

3. Regarding the demand of Rs. 7,15,04,131/- related to ocean freight, the appellant contended that no service tax could be charged for Business Support services. They claimed that any profit earned from activities related to ocean freight should not be considered as providing a service. The appellant cited various case laws to support their arguments.

4. The Revenue argued that the excess amount collected in the name of ocean freight was not a reimbursement but a consideration for providing Business Support services. The Revenue supported the findings of the adjudicating authority.

5. After hearing both sides, the Tribunal observed that other co-ordinate benches had granted stays on similar issues based on the case laws cited by the appellant. Therefore, the appellant made out a prima facie case for a complete waiver of the demand related to taxability on ocean freight for exports. Regarding the demand of CENVAT Credit, the appellant had already made substantial payments, which were considered sufficient deposits for granting stay on the remaining amounts confirmed, along with interest and penalties. As a result, the Tribunal ordered a stay on the recovery of the remaining amounts, interest, and penalties until the appeal's disposal.