2009 (5) TMI 66 - AT - Service Tax

Scientific and Technical Consultancy Services - The applicant contended that the activities carried out by them is the promotional work and stated that the prime objective of promotional work carried out by the applicant is to undertake exploration activity in national interest to develop Mineral Inventory of various minerals and to bridge the gap between initial discovery and detailed exploration of mineral deposits held that - that the applicant is a public sector undertaking and totally owned by the Govt. of India, Ministry of Mines and engaged in the activities of promotional work is having a good prima facie case in their favour and balance of convenience is lying in the favour of the applicant. In view of above we grant waiver of pre-deposit of Service tax, interest and penalty imposed on the applicant till final disposal of the appeal

Summary

The Appellate Tribunal CESTAT, Mumbai, consisting of S/Shri A.K. Srivastava and Ashok Jindal, heard a stay petition against an Order-in-Original confirming a demand of Rs. 4,36,88,734 under the Finance Act, 1994. The case involved a public sector undertaking that carried out promotional work for the Ministry of Mines, funded by a grant-in-aid. The applicant stopped paying service tax in 2002, as the Ministry of Mines did not agree to reimburse it. The Commissioner issued a show cause notice demanding the tax, interest, and penalties under various sections of the Finance Act, 1994. The applicant argued that the promotional work did not constitute a service and was not subject to service tax. They also cited financial hardship and disclosure of relevant facts. The Tribunal found in favor of the applicant, granting a waiver of pre-deposit until the appeal's final disposal. The decision was pronounced in court by the Tribunal members. The case highlighted the issue of whether promotional work undertaken by a public sector entity for a government department constitutes a taxable service under the Finance Act, 1994. The ruling ultimately favored the applicant, emphasizing their ownership and the nature of the work as factors in the decision. The case also touched on the importance of timely disclosure and financial considerations in such matters. The judgment's outcome underscores the significance of understanding the specific circumstances and legal interpretations surrounding service tax liability in similar cases.