2009 (7) TMI 1094 - AT - Service Tax

Summary

Issues involved: Classification of services under business auxiliary service and entitlement to Cenvat credit.

Classification of services under business auxiliary service: The appellant, acting as an intermediary in transmitting messages through cellular agencies, was brought under the purview of tax as a "business auxiliary service" provider. The appellant argued for entitlement to input credit, citing Section 65(105)(109a) of the Finance Act, 1994. The appellant contended that similar services should be reasonably classified in the respective category, referencing a previous case involving Cellebrum Technologies Ltd. The Tribunal directed the appellant to make a pre-deposit of Rs. 20 lakhs, pending further proceedings, without expressing a final opinion on the matter.

Entitlement to Cenvat credit: The appellant raised the issue of entitlement to Cenvat credit, emphasizing the need for proper classification of services. The appellant sought waiver of pre-deposit, highlighting arguable grounds related to Cenvat credit and service classification. The Joint CDR argued for pre-deposit under the category of business auxiliary services, citing similarity to a previous case.

Conclusion: The Tribunal noted the introduction of a new service category under Section 65(105)(zzzq) of the Finance Act, 1994, related to support services of business or commerce. While indicating that the appellant may not be immune from taxation under the new definition, the Tribunal directed the appellant to make a pre-deposit of Rs. 20 lakhs in two equal instalments. The realization of the balance demand was stayed pending compliance with the pre-deposit requirement.