2008 (2) TMI 141 - AT - Service Tax

Comm. (A) dismissed appeal for non-compliance with pre-deposit - applicants entered into a contract with the National Highway Authority for maintenance & repair of a certain portion of Highway and for this service the commuters to pay toll tax - As, the applicants are providing service to National Highway Authority, in respect of Toll collection, keeping in view, facts & circumstances, it is not a fit case for total waiver of Service tax Comm. (A) has not gone into merits, so case remanded

Summary

Issues:
1. Pre-deposit of service tax and penalties
2. Liability for service tax on Business Auxiliary Service
3. Compliance with stay order conditions
4. Appeal dismissal for non-compliance with Section 35 of Central Excise Act

Analysis:
1. The applicant filed an application for pre-deposit of service tax amounting to Rs. 40,61,513 and penalties. The Commissioner (Appeals) directed the applicant to deposit Rs. 15,00,000 towards service tax and Rs. 10,00,000 towards penalties. However, the applicant failed to comply with the stay order conditions, leading to the dismissal of the appeal.

2. The demand for service tax was confirmed based on the argument that the applicant provided Business Auxiliary Service and hence was liable for service tax. The applicant contended that they were collecting toll on behalf of the National Highway Authority and not providing any service to commuters. They argued that as per the definition of Business Auxiliary Service under the Finance Act, since no service was provided to commuters by the National Highway Authority, they were not liable to pay service tax.

3. The tribunal found that the applicants had entered into a contract with the National Highway Authority for maintenance and repair of a highway portion, with commuters paying toll tax for the service. The National Highway Authority authorized the applicant to collect toll tax on its behalf, indicating that the applicants were indeed providing a service to the Authority. Consequently, the tribunal directed the applicants to deposit Rs. 10,00,000 within eight weeks, with the remaining pre-deposit of service tax and penalties being waived upon this payment.

4. The Commissioner (Appeals) had dismissed the appeal due to non-compliance with Section 35 of the Central Excise Act, without delving into the merits of the appeal. The tribunal set aside this decision and remanded the case back to the Commissioner (Appeals) for a merit-based decision upon the deposit of Rs. 10,00,000. The appeal was disposed of by way of remand, emphasizing the need for compliance with statutory provisions.