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2013 (12) TMI 1012 - AT - Service TaxWaiver of pre deposit - Demand of service tax - Tax on postage charges - Rule 5(1) of the Service Tax Valuation Rules, 2006 - Held that - provisions of Rule 5(2) of Service Tax Valuation Rules, 2006 and the Indian Post Office Act, 1898 are satisfied that the applicant are not liable to pay service tax on this postage charges. Therefore, prima facie the applicants have made out a case for 100% waiver of pre-deposit. Accordingly, we waive the requirement of balance amount of service tax, interest and various penalties under the Finance Act, 1994 and stay recovery thereof during the pendency of the appeal - Stay granted.
Issues:
Service tax demand confirmed against the applicants for Rs. 85,60,425/- along with interest and penalties under the Finance Act. Contention regarding liability to pay service tax on postage recovered from the principles for dispatching documents to the transferee. Analysis: The Appellate Tribunal CESTAT MUMBAI addressed the issue of a service tax demand of Rs. 85,60,425/- confirmed against the applicants, who are share transfer agents and registry to issue. The demand included interest and penalties under the Finance Act. The applicants had already paid Rs. 8,76,599/- along with interest. The department contended that the applicants were liable to pay service tax on the total remuneration received from clients as per Rule 5(1) of the Service Tax Valuation Rules, 2006. However, the applicants argued that they should not be liable to pay service tax on the postage recovered from the principles for dispatching documents to the transferee, citing Rule 5(2) of the Service Tax Valuation Rules, 2006. The Tribunal examined the provisions of Rule 5(2) of the Service Tax Valuation Rules, 2006, along with the Indian Post Office Act, 1898. After considering the arguments presented by the applicants, the Tribunal was satisfied that the applicants were not liable to pay service tax on the postage charges recovered from the principles for dispatching documents to the transferee. Consequently, the Tribunal granted a 100% waiver of pre-deposit for the balance amount of service tax, interest, and penalties under the Finance Act, 1994. The Tribunal also stayed the recovery of the remaining amount during the pendency of the appeal. In conclusion, the Tribunal ruled in favor of the applicants, holding that they were not required to pay service tax on the postage charges recovered from the principles for dispatching documents to the transferee, based on the provisions of Rule 5(2) of the Service Tax Valuation Rules, 2006 and the Indian Post Office Act, 1898.
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