2014 (2) TMI 667 - AT - Service Tax

Waiver of pre deposit - Demand of service tax - Quantum of service tax - Assessee agrees to service tax demand but contenst quantum of demand - Held that - Prima facie case not in favour of assessee - Conditional stay granted.

Issues:
1. Validity of the demand for service tax and education cesses for the period from April 2004 to March 2009.
2. Invocation of the extended period of limitation for tax assessment.
3. Cum-tax treatment and its impact on the taxable value.
4. Financial hardships as a ground for waiver of pre-deposit.

Analysis:

Issue 1: Validity of the demand for service tax and education cesses
The appellant sought waiver and stay regarding the adjudged dues amounting to Rs. 17,06,203/- for services like 'Rent-a-Cab Service', 'Cleaning Service', 'Manpower Recruitment or Supply Agency Service', 'Port Service', and 'Maintenance or Repair Service'. While the taxability of these services was not in dispute, the appellant challenged the quantum of demand, arguing that the extended period of limitation was invoked without valid reasons. The appellant contended that the actual service tax payable for the normal period was significantly lower, around Rs. 40,000/- only. The Deputy Commissioner (AR) contested the plea of limitation, asserting that material facts were suppressed by the appellant, and the department discovered them through audit. The Tribunal noted the appellant's arguments but found that a firm plea of limitation was yet to be established.

Issue 2: Invocation of the extended period of limitation
The appellant raised concerns about the invocation of the extended period of limitation without valid reasons. The Deputy Commissioner (AR) presented copies of the worksheet prepared by the original authority to support the demand calculation. Despite receiving a copy of the worksheet, the appellant's consultant could not refute the correctness of the demand except for the cum-tax treatment aspect. The Tribunal considered the cum-tax plea and directed the appellant to pre-deposit Rs. 7.5 lakhs within six weeks, emphasizing compliance to be reported by specific dates. The Tribunal indicated a willingness to review the penalties imposed, along with the balance amount of service tax, education cesses, and interest, subject to the appellant's compliance.

Issue 3: Cum-tax treatment and its impact
The appellant contended that the cum-tax treatment was not appropriately considered, suggesting that if the gross amount was treated as cum-tax value and the tax element deducted, the taxable value would be lower, resulting in a reduced service tax demand of around Rs. 15 lakhs. While the Tribunal acknowledged this argument, it emphasized the need for the appellant to provide evidence to support the claim. The Tribunal directed the appellant to pre-deposit a specified amount within a set timeframe, indicating a potential waiver and stay on penalties based on compliance.

Issue 4: Financial hardships for waiver of pre-deposit
The appellant pleaded financial hardships as a ground for seeking a waiver of pre-deposit. Although this plea was noted by the Tribunal, it highlighted the lack of supporting evidence for the claim of financial difficulties. Despite considering this aspect, the Tribunal underscored the importance of complying with the pre-deposit requirement within the stipulated timeline for further actions related to penalties, service tax, education cesses, and interest.

In conclusion, the Tribunal's judgment addressed the validity of the demand, the invocation of the extended period of limitation, the impact of cum-tax treatment on taxable value, and the appellant's plea of financial hardships for waiver of pre-deposit, outlining specific directives for compliance and potential waiver and stay on penalties based on the appellant's actions.

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