2016 (6) TMI 920 - AT - Service Tax

Business Auxiliary service (BAS) - As per the agreement, the applicant is entitled to use spaces retained by APIL on lease and licence basis and retain licence fee - applicant submitted the from May,2006/June, 2007 the applicant is paying service tax on sale of spaces and advertisement/renting service. Therefore, for the period prior to that the applicant is not liable to pay service tax under the category of business auxiliary service - Held that - Prima facie, we are of the view that the applicant has not been able to make out a case for complete waiver of pre-deposit - stay granted partly.

Summary

Issues:
- Waiver of pre-deposit of service tax demand
- Classification of service under business auxiliary service
- Liability to pay service tax for the period prior to 1.5.2006/1.6.2007

Analysis:

1. Waiver of Pre-Deposit: The appellant sought waiver of pre-deposit of service tax demand amounting to &8377; 81,33,828/- along with interest and penalties under the Finance Act, 1994 for the period from 1.4.2004 to 30.4.2006. The appellant contended that they have been paying service tax on the sale of spaces and renting of services from May 2006/June 2007 onwards. However, the Tribunal found that the appellant failed to establish a case for complete waiver of pre-deposit. Consequently, the Tribunal directed the appellant to make a pre-deposit of &8377; 7.5 lakhs within four weeks, with the remaining demand of service tax, interest, and penalty being waived during the pendency of the appeal.

2. Classification of Service: The appellant was engaged in activities for M/s. Ansal Properties & Industries Ltd. under an agreement involving management of complex, advertising, promotion of shoppers traffic, newsletter mailing, and recovery of rent. The department, during an audit, contended that the appellant was providing business auxiliary services to M/s. APIL. The appellant argued that the classification of service was incorrect, asserting that the amounts received from customers were not remuneration for activities performed under the agreement with APIL. It was further contended that the appellant did not act as an agent of APIL and did not perform any business as a lessee of space.

3. Liability for Service Tax: The issue of liability to pay service tax for the period prior to 1.5.2006/1.6.2007 was raised. The appellant claimed that since they started paying service tax on the sale of spaces and advertisement/renting services from May 2006/June 2007 onwards, they should not be liable to pay service tax under the category of business auxiliary service for the period before that. However, the Tribunal noted that the appellant had indeed provided services of business auxiliary to promote the business of M/s. APIL during the period in question. As a result, the Tribunal directed the appellant to make the specified pre-deposit while waiving the balance demand of service tax, interest, and penalty during the appeal process.