2010 (4) TMI 501 - AT - Service Tax

Appellate Tribunal - The appellant is registered as a provider of security agency services to various Public Sector Units/Govt./Pvt. Organization. On scrutiny of the balance sheet revenue authorities found that it had not paid service tax for services provided to Government Agencies and PSUs. Assessee contended that since impugned demand was based on amount reflected in balance sheet suppression could not be alleged and demand was barred by limitation. Held that - since amount found due from assessee for normal period worked out to Rs. 12.5 lakhs and assessee had already paid an amount of Rs. 10 lakhs it was to be directed to make further deposit of an additional amount of Rs. 2.5 lakhs and on such deposit Commissioner (Appeals) would decide appeal on merit.

Summary

Issues:
- Waiver of predeposit and stay of recovery of Service Tax
- Dismissal of appeal for failure to make pre-deposit
- Claim of short payment of Service Tax due to misunderstanding
- Argument of demand being barred by limitation
- Order for pre-deposit and disposal of stay application

Waiver of predeposit and stay of recovery of Service Tax:
The application sought waiver of predeposit and stay of recovery of Service Tax amounting to Rs. 31,05,831 along with penalties under sections 78 and 76 of the Finance Act, 1994. The appeal was considered for disposal without further hearing after waiving the pre-deposit requirement.

Dismissal of appeal for failure to make pre-deposit:
The Commissioner had dismissed the appeal due to the appellant's failure to make the pre-deposit of the entire amount of Service Tax demanded. The appellant, a security agency service provider, had not paid Service Tax for services provided to Government agencies and PSUs, leading to the demand and penalties imposed.

Claim of short payment of Service Tax due to misunderstanding:
The appellant claimed that the short payment of Service Tax was due to the belief that tax was payable only upon collection, which they had not done for services to Government agencies and PSUs. The appellant argued a bona fide belief that they were not required to pay Service Tax in such cases, contrary to the opposing view that they were aware of the tax liability for other clients.

Argument of demand being barred by limitation:
The appellant argued that the demand was barred by limitation, citing a Tribunal decision regarding Excise Duty payment. The Tribunal found the appellant's reflection of commission in the balance sheet as indicative of bona fide, ruling against invoking a larger period of limitation based on similar grounds of bona fide belief.

Order for pre-deposit and disposal of stay application:
The Tribunal found the due amount for the normal period to be Rs. 12.5 lakhs, with the appellant having already paid Rs. 10 lakhs. An additional pre-deposit of Rs. 2.5 lakhs was ordered within eight weeks, and upon compliance, the appeal would be decided on merits without further pre-deposit requirements. The appeal was allowed by way of remand, and the stay application was also disposed of.