2014 (2) TMI 910 - AT - Service Tax

Waiver of pre deposit - Demand of service tax - Interest u/s 75 - Penalty u/s 77 & 78 - Business Auxiliary Service - Commission paid to overseas agents for procurement of export orders for textile products - Availment of the benefit of Notification No.14/2004-ST, dated 10.09.2004 - Held that - applicant had already deposited a sum of Rs.31,06,942/-, we find it sufficient for admission of the appeal and waive of pre-deposit of the balance amount of tax, interest and penalties and stay recovery thereof during the pendency of the appeal - Stay granted.

Summary

Issues:
1. Applicability of Notification No.14/2004-ST for availing benefits.
2. Eligibility for refund under Notification No.41/2007-ST.
3. Compliance with mandatory conditions and procedures for availing benefits.
4. Admissibility of appeal and waiver of pre-deposit.

1. Applicability of Notification No.14/2004-ST for availing benefits:
The case involved a company engaged in manufacturing and exporting textile goods that appointed overseas agents for procuring export orders. The company paid commissions to these agents, leading to a tax demand of Rs.45,16,958 under the Business Auxiliary Service category. The company contended that they were entitled to benefits under Notification No.14/2004-ST. The Commissioner, however, found that the company did not meet the mandatory conditions and procedures for availing these benefits. The Tribunal, after considering both sides, upheld the Commissioner's finding that the company was not eligible for the benefits under Notification No.14/2004-ST.

2. Eligibility for refund under Notification No.41/2007-ST:
The company also argued that they could claim a refund under Notification No.41/2007-ST. The authorized representative for the Revenue stated that the Commissioner had determined that the company failed to follow the necessary conditions and procedures for availing this refund. The Tribunal concurred with the Revenue's representative that the company was not entitled to the benefits under Notification No.41/2007-ST.

3. Compliance with mandatory conditions and procedures for availing benefits:
It was highlighted that the Commissioner had given a detailed finding that the company did not adhere to the mandatory conditions and procedures required for availing the benefits under the relevant notifications. This non-compliance was a crucial factor in the Tribunal's decision regarding the company's eligibility for the benefits.

4. Admissibility of appeal and waiver of pre-deposit:
Despite the findings against the company regarding the benefits under the notifications, the Tribunal acknowledged that the company had already paid a significant sum of Rs.31,06,942. Considering this payment, the Tribunal deemed it sufficient for the admission of the appeal. Consequently, the Tribunal waived the pre-deposit of the remaining tax, interest, and penalties, allowing a stay on the recovery during the appeal's pendency.

This comprehensive analysis of the judgment covers the issues of applicability of notifications, eligibility for refunds, compliance with conditions, and the Tribunal's decision on the admissibility of the appeal and waiver of pre-deposit.