2013 (11) TMI 914 - AT - Service Tax

Waiver of pre deposit - Appellant contends that provisions were only made in records and no service was rendered to the appellant by foreign agency - Held that - The materials brought to our notice today are only some accounting figures without the material evidence to show that there was a dialogue between the appellant and foreign service provider and that was not materialized and provision was only book entries. Neither there is any whisper in the published accounts about materialization of the dialogue between the parties nor the Director s report was placed before us to appreciate that shareholders of the company were informed about the contract. Such propositions are enough to ask for pre-deposit when fluctuation in foreign currency, TDS was involved in the entire transaction as shown to us today - All the above aspects prove that appellant has not come out with clean hands to claim that there should be waiver of pre-deposit and no incidence of tax arose - Prima facie case not in favour of assessee - stay granted partly.

Summary

Issues: Liability of service tax on provision made in records by foreign agency; Requirement of pre-deposit by the appellant.

Liability of service tax on provision made in records by foreign agency:
The appellant argued that no service was rendered by the foreign agency, hence no liability of service tax should exist. The Tribunal requested documentary evidence from the appellant to determine the purpose of the provision in the accounts. However, the materials presented by the appellant were insufficient. There was no concrete evidence to prove the existence of a dialogue between the appellant and the foreign service provider, or that any actual service materialized. The absence of information in published accounts or the Director's report further weakened the appellant's case. The Tribunal noted the involvement of fluctuation in foreign currency and TDS in the transaction, indicating a need for pre-deposit due to the lack of clarity and transparency in the appellant's submissions.

Requirement of pre-deposit by the appellant:
Based on the evidence presented and the lack of transparency in the appellant's case, the Tribunal directed the appellant to make a pre-deposit of Rs.15,00,000 within four weeks. The Tribunal emphasized that the appellant did not demonstrate clean hands in claiming a waiver of pre-deposit and denying the incidence of tax. The appellant was instructed to comply with the pre-deposit requirement by a specified date. The decision was pronounced in open court, highlighting the importance of adhering to procedural requirements and demonstrating transparency in tax-related matters.