2014 (2) TMI 814 - AT - Service Tax

Classification of services - business of packing parcels from parties in India handing to courier agencies - Business Support Service or not - Export of services - Held that - in respect of the direction from the Tribunal to place all records that are necessary to prove the claims of the applicant. The applicant has not do so and is before the Tribunal again with fresh documents for resolving the dispute. This can be looked only at the time of appeal hearing. The applicant is also claiming that the services was actually exported but there is no clear demonstration whether consideration has been realized in foreign exchange but for the letter of UB Xpress (South) Pvt. Ltd., as reproduced in the adjudication order. - stay granted partly.

Summary

Issues:
Classification of services as Business Support Service, liability for service tax, export service classification, pre-deposit requirement.

Classification of services as Business Support Service:
The Tribunal examined whether the services provided by the applicant, involving packing parcels and handing them over to courier agencies for international delivery, should be classified as Business Support Service liable for service tax. The Revenue contended that the services fell under this category and issued a demand notice for payment of Rs.59,20,783. The applicant argued that they were merely co-loaders and should not be classified as such. They also highlighted a circular exempting co-loaders from tax payment during the relevant period. The Tribunal considered these arguments and directed a de novo adjudication.

Liability for service tax and penalty imposition:
In the de novo adjudication, the amount was confirmed, leading to the applicant's appeal. The applicant claimed they had been paying service tax under the Courier Agency category since a certain date and should not be subjected to a different classification for the earlier period. They presented certificates indicating that the services were exported and the consideration received was from business conducted abroad. The Revenue argued that the applicant had changed their stance during proceedings and had not provided sufficient evidence earlier. They emphasized the need for pre-deposit due to lack of clarity on consideration received in foreign exchange.

Export service classification and pre-deposit requirement:
The Tribunal evaluated the evidence presented by both parties. While the applicant asserted that the services were exported and consideration was received in foreign exchange, the Revenue raised doubts regarding the completeness of the invoices and the clarity of foreign exchange transactions. The Tribunal found that the applicant had not adequately substantiated their claims and ordered a pre-deposit of Rs.10 lakhs within eight weeks for further consideration, emphasizing the importance of providing necessary records to support their contentions.

This detailed analysis of the judgment highlights the key issues of classification, tax liability, export service categorization, and pre-deposit requirements, providing a comprehensive overview of the legal considerations and arguments presented before the Tribunal.