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2010 (6) TMI 167 - AT - Service TaxStay- Business Auxiliary Service- Show cause notice was issued to bring the appellant to the fold of levy of service tax under Finance Act, 1994 in respect of Business Auxiliary Services provided for the period July 2003 to January 2007. Adjudicating authority found that SICCL had launched various projects of housing and real estate. Air travel passengers of the appellant Airlines were targeted as potential customers in terms of agreement dated 30-3-1995 entered into between SAL and SICCL to promote business of the later by the appellant and project information was brought to the later by the appellant and project information was brought to the notice of such customers through printing in air tickets of M/s. SAL. Necessary consideration per passenger ticket was paid to the appellant Airlines for such purpose by SICCL. Held that- activity in the nature of service whether provided individually or integrally with other activities not charges chargeability when incidence of levy occurs. Prima facie service provided in the nature of business auxiliary. Thus there is not total waiver of penalty.
Issues Involved:
1. Whether the appellant provided services taxable under the category of business auxiliary service. 2. Whether the extended period of limitation is invokable under Section 73 of the Finance Act, 1994, and whether the appellant is liable to penalties under Sections 76, 77, and 78, as well as interest under Section 75 of the Finance Act, 1994. 3. Whether the gross amount charged is to be considered inclusive of service tax. Issue-wise Detailed Analysis: 1. Taxability under Business Auxiliary Service: The learned Adjudicating Authority examined the agreement dated 30-3-1995 between M/s. SAL and M/s. SICCL and found that M/s. SAL was promoting the real estate and housing business of M/s. SICCL. The services provided by M/s. SAL were categorized as "Business Auxiliary Services" and were deemed taxable under the Finance Act, 1994, effective from 1-7-2003. The Authority concluded that the appellant was indeed providing taxable services by promoting the business and area of operation of M/s. SICCL, as evidenced by the statements and corroborated by various documents. 2. Extended Period of Limitation and Penalties: The Authority held that the extended period of limitation was applicable because M/s. SAL failed to disclose material facts and did not pay service tax on the "Business Auxiliary Service" provided, causing a loss of revenue. The opinion taken from a consultant did not prove the bona fide of the appellant. Consequently, the Authority imposed penalties under Sections 76, 77, and 78, and interest under Section 75 of the Finance Act, 1994. The plea of lack of jurisdiction was also discarded. 3. Gross Amount Inclusive of Service Tax: The Authority found that the appellant's claim regarding the gross amount being inclusive of service tax was merited. However, the penalty issue was decided against the appellant, and the interest liability was confirmed. Additional Findings and Orders: The Tribunal noted that the appellant had entered into an agreement with M/s. SICCL to promote its housing projects, and the payments received were accounted for as "Operational Revenue." The statements from various individuals and documents corroborated the nature of the services provided. The Tribunal also observed that the appellant's claim of merely using the logo of M/s. SICCL without providing "Business Auxiliary Service" was unfounded. The Tribunal directed the appellant to make a pre-deposit of Rs. 100 crore (comprising Rs. 64 crore towards service tax and Rs. 36 crore towards penalty and interest) within eight weeks, with compliance to be reported within one month of the deposit. The realization of the balance demand was stayed until the disposal of the appeal. Conclusion: The Tribunal concluded that the appellant was providing taxable "Business Auxiliary Services" and upheld the extended period of limitation and the penalties imposed. The Tribunal directed a substantial pre-deposit to protect the interest of revenue, considering the financial difficulties pleaded by the appellant.
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