2014 (3) TMI 74 - AT - Service Tax

Waiver of pre-deposit of tax - Interest u/s 75 - Penalty u/s 78 - Demand of tax - Business Auxiliar Service - Held that - Business Auxiliary Service would cover any service in relation to procurement of goods or services which are inputs for the clients . The Commissioner observed that the procurement of goods or service by the service provider must be used by the manufacturer or the service provider as the case may be. In this case, the applicant booked the space for cargo for transporting of their clients goods, which has been utilized by the exporter/importer. Prima facie, it appears that the extra amount collected by the applicant is in relation to the procurement of that service - Conditional stay granted.

Summary

Issues:
Waiver of pre-deposit of tax under Section 73(1) of the Finance Act, 1994 along with interest under Section 75 and penalty under Section 78.
Alleged collection of extra charges from clients forming part of taxable service under Business Auxiliary Service.

Waiver of Pre-deposit of Tax:
The applicant sought waiver of pre-deposit of tax amounting to Rs.1,38,23,529 imposed under Section 73(1) of the Finance Act, 1994, along with interest under Section 75 and penalty under Section 78. The applicant argued that they did not render any service which is an input for their clients, and the demand of tax under Business Auxiliary Service was not sustainable. They contended that the extra amount collected was in the nature of profit while charging customers towards freight charges. The authorized representative, however, reiterated the Commissioner's findings, stating that the consideration was in relation to procurement of goods or services, which are inputs to the client, falling under Section 65(90)(iv) of the Finance Act, 1994.

Interpretation of Business Auxiliary Service:
The Tribunal analyzed the concept of Business Auxiliary Service, which covers 'any service in relation to procurement of goods or services which are inputs for the clients.' The Commissioner noted that the procurement of goods or service by the service provider must be used by the manufacturer or the service provider. In this case, the applicant booked space for cargo transportation for their clients' goods, which were utilized by the exporter/importer. The Tribunal agreed with the authorized representative that the case laws relied upon by the applicant pertained to CHA services, not Business Auxiliary Service. The Tribunal directed the applicant to pre-deposit a sum of Rs.30 lakhs within six weeks, with the balance amount of tax, penalty, and interest to be waived and recovery stayed during the appeal's pendency.

Conclusion:
In conclusion, the Tribunal's judgment upheld the Commissioner's decision regarding the tax liability under Business Auxiliary Service. The Tribunal found that the extra amount collected by the applicant was related to the procurement of services utilized by the exporter/importer, justifying the tax demand. The Tribunal's directive for pre-deposit and subsequent waiver of the balance amount ensured compliance with the legal provisions while allowing the appeal to proceed without immediate financial burden on the applicant.