2008 (1) TMI 242 - AT - Service Tax

Works composite - contract issue in this matter has been referred to Larger Bench - appellants have already pre-deposited the tax amounts so, we are inclined to grant waiver of pre-deposit of penalty Intellectual property service & transfer of technical know-how - once there is revenue neutrality, then duty is not required to be paid as held by SC in another case - assessee is paying tax of more than 250 crores & there is no threat to the revenue for recovering this amount, so stay granted

Summary

Issues: Stay applications seeking waiver of pre-deposit of duty and penalty amount in two separate cases - one related to service tax and penalty, and the other concerning technical know-how transfer and penalty.

Analysis:

1. Service Tax and Penalty Case:
In the first case, the appellants sought waiver of pre-deposit of duty and penalty amount. The appellants argued that since the issue had been referred to the Larger Bench, it should be considered contentious, and therefore, waiver of pre-deposit should be granted. The appellants had already deposited the service tax amount and requested waiver of penalty, contending that they had a strong case on merits. The Tribunal noted that the issue had indeed been referred to the Larger Bench and decided to grant waiver of pre-deposit of penalty amount until the appeal's disposal. The Tribunal highlighted that revenue recovery was barred even after 180 days due to various judgments of the Supreme Court and the Tribunal.

2. Technical Know-How Transfer and Penalty Case:
In the second case, the appellants sought waiver of pre-deposit of duty and penalty amount related to the transfer of technical know-how. The appellants argued that the issue had been clarified by the Board through a letter, which the Commissioner had not accepted, leading to a dispute. The appellants claimed that the revenue was time-barred from recovering the amounts as the proceedings for the earlier period had been dropped. The revenue contended that there was no res judicata or estoppel in the matter, and the designs in question fell within the definition of the Designs Act, making them subject to service tax. The Tribunal considered the arguments and noted that the clarification by the Board had been distinguished by the Commissioner. However, at the prima facie stage, the Tribunal could not conclusively determine the applicability of the clarification. The Tribunal also considered the plea of revenue neutrality and the substantial tax payments made by the appellants, concluding that there was no threat to revenue recovery. Consequently, the Tribunal allowed the stay application, granting waiver of pre-deposit and staying recovery, emphasizing that revenue recovery was barred even after 180 days based on relevant legal precedents.

In both cases, the Tribunal carefully analyzed the arguments presented by the appellants and the revenue, considered the legal implications of the issues raised, and made decisions based on the specific circumstances of each case, ensuring fairness and adherence to legal principles.