2009 (2) TMI 180 - AT - Service Tax

VISA services to various sovereign countries, ground handling agency service and cargo handling service held that - . On a careful consideration of the matter, we find that the issue with regard to service rendered by the applicant, whether the service provided by them is a sovereign function of a country or not, is not clear and debatable. The circular which has been relied on would also, prima facie, not in favour of the applicant - Thus the appellant has not made out prima facie case for complete waiver of pre-deposit of the amount. Accordingly, we direct the applicant to deposit an amount of Rs. 25,00,000/- (Rupees Twenty five lakhs only) within a period of four weeks and on such deposit, the pre-deposit of balance amount of service tax, interest and penalty involved in the matter stands waived and recovery stayed till the disposal of the appeal

Summary

Issues: Stay application for waiver of pre-deposit of service tax, education cess, interest, and penalties; Whether services provided are sovereign functions; Time bar for the demand.

In this judgment by the Appellate Tribunal CESTAT, Bangalore, the applicant filed a stay application seeking a waiver of pre-deposit for various amounts including service tax, education cess, interest, and penalties. The learned Consultant argued that the services provided by the applicant, related to VISA services, ground handling agency service, and cargo handling service for various consulates, are not covered under 'Business Auxiliary Service' (BAS) due to their sovereign nature. The Consultant also claimed that the demand was time-barred, referring to a letter from 2002. The learned SDR contended that the issue was unclear and conditions should be imposed on the applicant.

Upon review, the Tribunal found the nature of services provided by the applicant to be unclear and debatable regarding whether they constituted sovereign functions of a country. The reliance on a circular was not in favor of the applicant, and the time bar issue was inconclusive as the mentioned letter did not establish service to the concerned authority in Bangalore. Consequently, the Tribunal concluded that the appellant did not establish a prima facie case for a complete waiver of pre-deposit. Therefore, the Tribunal directed the applicant to deposit Rs. 25,00,000 within four weeks, after which the pre-deposit of the remaining amount would be waived, and recovery stayed pending appeal disposal, with compliance to be reported by 1st April 2009.

Additionally, the learned Consultant requested an expedited appeal hearing due to the substantial amount involved. The Tribunal granted this request, ordering the Registry to schedule the appeal for a hearing on 27th May 2009, conditional on compliance with the deposit directive. The judgment was pronounced and dictated in open court, ensuring transparency and procedural regularity in the legal process.