2014 (1) TMI 36 - AT - Service Tax

Waiver of pre deposit - Disallowance of Cenvat credit - credit availed on advertisement service - Held that - audit has been viewed by the Tribunal that Finance Act, 1994 not being a commodity taxation law for which there shall not be levy of Service Tax on such sale. So far as availing Cenvat credit on advertisement service, travel consultant service and recruitment and placement service availed is concerned, we are of prima facie of the view that if the appellant is directed to deposit Rs. 6.00 lakhs (Rupees Six lakhs) as an interim measure to protect interest of Revenue that shall serve interest of justice - Following decision of Modi Xerox Ltd. v. State of Karnataka 2005 (8) TMI 359 - SUPREME COURT OF INDIA - Decided partly in favour of assessee.

Summary

Issues involved:
1. Levy of Service Tax on spare parts
2. Allocation of Cenvat credit on advertisement service
3. Disallowance of Cenvat credit on travel consultant service
4. Claim of Cenvat credit on recruitment or placement service
5. Disallowance of Cenvat credit on catering service

Levy of Service Tax on spare parts:
The counsel for the appellant acknowledged that the levy of Service Tax on spare parts is impermissible under the Finance Act, 1994, citing it as a settled principle of law. Referring to the Apex Court's judgment in the case of Modi Xerox Ltd. v. State of Karnataka, the Tribunal concurred that the Finance Act, 1994 does not authorize the imposition of Service Tax on the sale of spares and parts. Therefore, the Tribunal ruled in favor of the appellant on this issue.

Allocation of Cenvat credit on advertisement service:
The counsel for the appellant proposed that the Cenvat credit availed on advertisement service should be apportioned between the sale of motor cars and the service of motor vehicles at a ratio of 60% and 40% respectively. The Tribunal, prima facie, agreed with this proposal and directed the appellant to deposit a specified amount as an interim measure to safeguard the Revenue's interest. Compliance with this directive would lead to a waiver of the pre-deposit of the remaining balance during the pendency of the appeal.

Disallowance of Cenvat credit on travel consultant service:
Regarding the disallowance of Cenvat credit on travel consultant service, the counsel contended that this service was utilized for the travel of the appellant's employees related to servicing motor cars. The Tribunal did not explicitly address this issue in the summarized text but directed the appellant to make a deposit as an interim measure, indicating a need for further examination during the course of the hearing.

Claim of Cenvat credit on recruitment or placement service:
The counsel argued that the Cenvat credit claimed on recruitment or placement service should be allocated in a ratio of 80% towards sale and servicing of motor cars and 20% for other purposes. The Tribunal did not provide a detailed analysis of this issue in the summarized text but directed the appellant to deposit a specified amount as an interim measure, subject to compliance for a waiver of the pre-deposit of the remaining balance during the appeal.

Disallowance of Cenvat credit on catering service:
The counsel mentioned a minor disallowance of Cenvat credit on catering service amounting to Rs. 2,571, which needed further examination during the hearing. The Tribunal did not provide a conclusive decision on this specific issue in the summarized text but indicated that it would be looked into during the course of the proceedings.

Overall, the Tribunal's judgment addressed various issues related to the levy of Service Tax on specific services and the allocation of Cenvat credit, emphasizing the need for interim deposits by the appellant to protect the Revenue's interests pending the appeal process.