2009 (10) TMI 29 - AT - Service Tax

Business Auxiliary Service versus Clearing and forwarding service held that - demand was confirmed by taking into consideration the decision of the Tribunal in the case of Prabhat Zarda Factory (India) Ltd. which stands over-ruled by the decision of the larger Bench of the Tribunal in the case of Larsen & Toubro Ltd. and the contention of the Applicants is that they are only procuring orders on commission basis. In these circumstances the pre-deposit of amount of service tax, interest and penalties are waived for hearing of the Appeal. Stay Petition is allowed.

Summary

Issues:
1. Condonation of delay in filing the Appeal and waiver of pre-deposit of Service Tax.
2. Dismissal of Appeal for non-compliance with Section 35F of Central Excise Act.
3. Dispute regarding the nature of service provided by the Applicants.
4. Interpretation of previous Tribunal decisions on similar cases.

Analysis:
1. The Applicant filed for condonation of a 4-day delay in filing the Appeal, which was granted by the Tribunal due to valid reasons provided. The Applicant also sought a waiver of pre-deposit of Service Tax amounting to Rs. 31,09,417 along with interest and penalties. The demand was initially confirmed based on the Tribunal's decision in a previous case. However, the Tribunal acknowledged the Applicant's claim that they were procuring orders on a commission basis, not acting as clearing and forwarding agents. Citing a larger Bench decision, the Tribunal waived the pre-deposit and allowed the Stay Petition.

2. The Commissioner(Appeals) had directed the Applicant to deposit Rs. 10,00,000 for the Appeal hearing, but the Applicant failed to comply with the stay order, resulting in the dismissal of the Appeal for non-compliance with Section 35F of the Central Excise Act. The Tribunal found that the Commissioner had not delved into the merits of the Appeal and had dismissed it solely on non-compliance grounds. Consequently, the Tribunal set aside the impugned order and remanded the matter to the Commissioner(Appeals) for a decision on the Appeal's merits without insisting on the pre-deposit, ensuring the Appellants are given a fair hearing opportunity.

3. The crux of the dispute revolved around the nature of the service provided by the Applicants. While the Revenue contended that the Applicants were indeed acting as clearing and forwarding agents, the Applicants argued that they were merely procuring orders on a commission basis. The Tribunal, after considering the conflicting claims and the relevant Tribunal decisions, sided with the Applicants' assertion, ultimately leading to the waiver of the pre-deposit amount and the allowance of the Stay Petition for the Appeal hearing.

4. The Tribunal's decision heavily relied on the interpretation of previous Tribunal judgments in similar cases. The initial demand confirmation was based on a Tribunal decision that was subsequently overruled by a larger Bench decision. This shift in precedent played a crucial role in the Tribunal's determination to waive the pre-deposit amount and remand the Appeal for a fresh consideration on its merits, emphasizing the importance of legal precedents in tax matters.