2017 (12) TMI 1504 - HC - Service Tax

Levy of service tax - service provided in SEZ units - case of Revenue is that in the absence of all the agreement copies, there is every possibility that the assessee may have provided services at places outside the SEZ in respect of other units also - Held that - Under Notification No.4 of 2004 dated 31.03.2004, taxable services of any description, as defined in Section 65(1)(90) of the Finance Act, 1994, provided to a developer of a SEZ or a unit of a SEZ by any service provider is exempted from the whole of the service tax leviable thereon, subject to conditions. The Tribunal failed to note that the assessee produced invoices clearly indicating that the services provided by him were in a SEZ - As the Tribunal did not take note of these factual aspects while considering the application filed by the assessee for waiver of the predeposit and stay and straight away directed deposit of the entire assessed liability as a condition precedent, consequent upon which the appeal itself came to be dismissed thereafter owing to his failure to do so, we are of the opinion that the orders under appeal cannot be sustained and the Tribunal necessarily has to examine the matter afresh - matter on remand.

Summary

Issues Involved:
1. Interpretation of the finding by the Appellate Tribunal regarding services rendered to SEZ units.
2. Determination of whether services rendered in relation to housekeeping qualify as manpower supply.
3. Justification of directing the appellant to deposit the entire tax amount with interest as a condition for waiving penalty despite financial constraints.

Analysis:
1. The appeal under Section 35G of the Central Excise Act, 1944 raised questions regarding the Appellate Tribunal's finding on services rendered to SEZ units. The Commissioner classified security services under 'Security Agency Services' and housekeeping services under 'Manpower Supply Services,' leading to a tax liability determination. The Tribunal directed the appellant to deposit the assessed tax amount and interest, questioning the proof of services provided within a SEZ. The Tribunal's failure to consider invoices indicating services in a SEZ led to the appeal's rejection.

2. The issue of whether housekeeping services partake the character of manpower supply was also raised. The Commissioner's classification was challenged, emphasizing the SEZ exemption for services provided to SEZ units. The Tribunal's decision to grant waiver only on the penalty component, subject to full tax liability deposit, was based on the lack of conclusive proof regarding services within SEZs. The subsequent rejection of the appeal due to non-compliance highlighted the importance of evidentiary documentation.

3. The Tribunal's order necessitating the entire tax amount deposit along with interest as a condition for waiving penalty was contested based on the appellant's financial position. The Tribunal's failure to consider invoices clearly indicating services in SEZs and the subsequent dismissal of the appeal due to non-compliance underscored the need for a comprehensive review. The High Court set aside the Tribunal's orders, directing a fresh consideration of the waiver application by examining all relevant factual aspects to ensure a fair decision-making process.

In conclusion, the High Court's judgment emphasized the importance of considering all evidence, especially invoices indicating services in SEZs, in determining tax liabilities and waiver conditions. The decision highlighted the necessity for a thorough review to ensure fairness and adherence to legal provisions, ultimately allowing the appeal and restoring it for a fresh assessment based on complete factual considerations.