2013 (11) TMI 647 - AT - Service Tax

Demand of service tax - Business auxiliary service - Section 65(19) - Held that - service tax registrant for providing the taxable Air Travel Agent service and was remitting service tax on the income received from airlines and bona fide believed that the income received from travel agents does not constitute income from any taxable service nor was it liable to be classified as BAS. Challenge is also to invocation of the extended period of limitation for passing the order of assessment - Prima facie case not in favour of assessee - Stay granted partly.

Summary

Issues:
1. Non-remittance of service tax on amounts received from travel agents for providing business auxiliary service.
2. Interpretation of whether income received from travel agents constitutes income from a taxable service.
3. Challenge to the invocation of the extended period of limitation for passing the order of assessment.

Issue 1: Non-remittance of service tax on business auxiliary service:
The petitioner was proceeded against for not remitting service tax on amounts received from travel agents for providing business auxiliary service as defined in Section 65(19) of the Finance Act 1994. Both the adjudicating authority and the Commissioner (Appeals) found that the petitioner promoted and marketed the business of travel agents by procuring tickets for servicing the petitioner's clients, falling within the definition of Business Auxiliary Service.

Issue 2: Interpretation of taxable service income:
The petitioner argued that it was already a service tax registrant for providing Air Travel Agent service and was remitting service tax on income received from airlines. The petitioner contended that the income received from travel agents did not constitute income from any taxable service and should not be classified as Business Auxiliary Service. The Tribunal granted a stay of further proceedings and waiver of pre-deposit on the condition that the petitioner remits the assessed tax and interest within a specified timeframe.

Issue 3: Extended period of limitation for assessment:
The challenge was also made regarding the invocation of the extended period of limitation for passing the assessment order. The Tribunal disposed of the stay application by granting a stay of proceedings subject to the petitioner remitting the assessed tax and interest within a specified timeframe, failing which the stay would be dissolved, and the appeal rejected for failure of pre-deposit.

This judgment addressed the issues of non-remittance of service tax on business auxiliary service, interpretation of taxable service income, and the challenge to the extended period of limitation for assessment. The Tribunal found that the petitioner's activities fell within the definition of Business Auxiliary Service and required remittance of the assessed tax and interest within a specified timeframe to maintain the stay of proceedings.