2013 (10) TMI 686 - AT - Service Tax

Stay application - Penalty u/s 78 - Franchise Service - Held that - Applicant had paid the said amount, when they were not required to pay the service tax on Franchise Service. It is also not in dispute that the said amount had been adjusted in the subsequent period by reflecting in their respective ST-3 returns. Prima facie, we find that the decisions cited by the ld. Advocate are applicable to the facts and circumstances of the present case. In these circumstances, the Applicant could able to make out a prima facie case for total waiver of the dues adjudged. Accordingly, pre-deposit of all dues adjudged is waived and its recovery stayed during pendency of the Appeal - Stay granted.

Summary

Issues: Application for waiver of duty and penalty under Section 78 and penalties under various provisions of the Finance Act, 1994.

Analysis:
1. The applicant sought waiver of duty and penalties under the Finance Act, 1994, totaling Rs. 9.71 lakh and Rs. 10.00 lakh, respectively, along with penalties under various provisions. The applicant had paid service tax on Franchise Service for the period 2001-02 to 2003-04, before the tax came into effect on 01.07.2003. An excess payment of Rs. 10,15,060/- was made, out of which Rs. 9,71,873/- was adjusted as per Rule 6(4A) of the Service Tax Rules, 1994, between October 2004 and March 2007. The applicant relied on decisions from the Mumbai and Delhi Benches of the Tribunal to support the claim for adjustment of excess payment, highlighting a contradiction in the orders of the Adjudicating Authority and the Commissioner (Appeals).

2. The Revenue, represented by the ld. AR, supported the findings of the Commissioner (Appeals) regarding the denial of adjustment of the excess payment under Rule 6(4A) of the Service Tax Rules, 1994. However, the Tribunal examined the submissions from both sides and acknowledged that the applicant had paid the amount when not required to do so, and the excess amount had been adjusted in subsequent periods through ST-3 returns. The Tribunal found the decisions cited by the applicant's advocate relevant to the case, indicating a prima facie case for total waiver of the adjudged dues. Consequently, the Tribunal granted a waiver of the pre-deposit of all dues adjudged and stayed the recovery during the pendency of the appeal.

3. In conclusion, the Tribunal allowed the stay petition, emphasizing the applicant's successful establishment of a prima facie case for the waiver of the duty and penalties under the Finance Act, 1994. The decision was based on the applicant's early payment of service tax on Franchise Service, the subsequent adjustment of excess payment, and the applicability of relevant decisions from other Tribunal benches to the present circumstances.