2010 (5) TMI 352 - AT - Central Excise

Waiver of pre-deposit - eligibility to Cenvat credit of the service tax paid on the corporate membership - service tax paid on the Club Membership - appellant has utilized such facilities for the sales promotion of their business activity - Held that - It is seen from the records that there is nothing on record to show that after availing such membership the appellant has in fact utilized the facilities for promotion of business - pre-deposit of amounts involved is waived and recovery thereof stayed till disposal of the appeal

Summary

Issues:
1. Stay petition for waiver of pre-deposit of tax, interest, and penalty.
2. Eligibility of Cenvat credit on service tax paid for corporate membership of Karnataka Golf Association (KGA).

Analysis:
1. The appellant filed a stay petition seeking a waiver of pre-deposit of tax, interest, and penalty amounting to Rs. 1,83,600 and Rs. 10,000 respectively. The Chartered Accountant representing the appellant argued that the service tax paid on the Club Membership of KGA was utilized for sales promotion, citing a judgment from the Hon'ble High Court of Delhi. On the other hand, the Departmental Representative contended that there was no evidence to prove that the facilities of KGA were used for sales promotion after availing the membership. The Tribunal observed that the issue of eligibility for Cenvat credit on the service tax paid for corporate membership of KGA was contentious. Since there was no evidence of utilizing the facilities for business promotion, the Tribunal directed the appellant to deposit Rs. 90,000 within four weeks and report compliance. The pre-deposit of the remaining balance was waived, and recovery stayed pending the appeal's disposal.

2. The main issue in this case revolved around the eligibility of Cenvat credit on the service tax paid for the corporate membership of KGA. The appellant argued that the membership expenses should be treated as an expenditure for establishing business, relying on a relevant judgment. However, the Departmental Representative emphasized the lack of evidence showing the utilization of KGA facilities for sales promotion post-membership. The Tribunal, after considering both arguments, found that the appellant failed to establish a prima facie case for complete waiver of the adjudged amounts. Consequently, the Tribunal ordered a partial deposit and stayed the recovery of the remaining balance until the appeal's final disposal.