2012 (8) TMI 403 - AT - Service Tax

Double taxation of service tax - subcontractor - the appellant stated that when the appellant provided courier service to the main courier namely professional couriers and service tax having been paid by the latter, there shall not be levy on the appellant. - held that - No doubt, larger bench decided in Vijay Sharma & Co. & 2 Others Vs CCE Chandigarh - 2010 (4) TMI 570 - CESTAT, NEW DELHI the case of stock brokers and sub-brokers where the matter in controversy was about taxability as was the question framed in para-1 of the reported decision cited by ld. Counsel. We do appreciate that larger bench decision emerged subsequent to adjudication. Therefore, ld. Adjudicating authority had no advantage of reading that decision. But entire plea of appellant was without proof and nothing was proved to show that the appellant was a mere agent of the principal courier. It is therefore not possible to hold that the appellant acted as a courier without being a provider of business support service. Stay granted - matter remanded back to pass a reasoned and speaking order dealing with pleadings and evidence..

Summary

Issues:
- Service tax demand and penalty under Section 78 of the Finance Act, 1994
- Applicability of double taxation
- Interpretation of Business Support Service under Section 65 (104) (c) of the Finance Act, 1994
- Proof of appellant's role as a courier or provider of business support service
- Consideration of larger bench decision on taxability of stock brokers and sub-brokers
- Requirement of predeposit in the adjudication process

Analysis:

The appellant challenged the service tax demand and penalty imposed under Section 78 of the Finance Act, 1994, arguing that since the main courier had already paid the service tax, there should be no levy on the appellant. The appellant contended that they were not providing business support service before a specific date and cited a decision by a larger bench in support of their case. The adjudicating authority classified the appellant under the taxing entry of Business Support Service, alleging that receipts from other couriers had escaped taxation. The authority found that the appellant provided business support service as defined in Section 65 (104) (c) of the Finance Act, 1994.

During the hearing, it was noted that the appellant failed to prove that they were acting as a courier in substance or that they were merely an agent of the principal courier. The evidence provided, including a letter from the main courier, did not clarify the nature of the appellant's activities, the payments received, or the tax liabilities discharged. The absence of an agreement or terms of arrangement between the parties made it difficult to ascertain the appellant's role accurately.

Although a larger bench decision on the taxability of stock brokers and sub-brokers was cited, the appellate tribunal emphasized that the appellant's plea lacked proof of their status as a mere agent of the principal courier. The tribunal acknowledged the need for a thorough examination of material facts and evidence based on statutory provisions and the larger bench decision.

To ensure a fair hearing, the tribunal decided to dispense with the requirement of predeposit and remit the matter back to the adjudicating authority for a detailed review, affording the appellant a reasonable opportunity to present evidence and arguments. The stay application and appeal were disposed of accordingly, emphasizing the importance of a reasoned and speaking order in the adjudication process.