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2014 (5) TMI 575 - AT - Service TaxService tax demand - banking and financial services - reverse charge mechanism - activity of issue of credit card - Held that - Prima facie, we are of the view that the applicants are liable to pay service tax on the above said activity for the period 18/04/2006 to 30/04/2006 under the category of banking and financial services. Therefore, we direct the applicant to make a pre-deposit of Rs.5,98,087/- within four weeks - Conditional stay granted.
Issues:
Service tax demand confirmation under banking and financial services for a specific period under reverse charge mechanism. Analysis: The judgment addresses the service tax demand of Rs.15,24,015/- confirmed against the applicant for the period 18/04/2006 to 30/04/2006 under the category of banking and financial services. The applicant argued that they should not be liable to pay service tax prior to 01/05/2006 as the activity of issuing credit cards and services related to credit cards became taxable only from that date. The applicant also contended that they were not liable to pay service tax under the reverse charge mechanism for the period before 18/04/2006. The applicant submitted a certificate from a Chartered Accountant showing a lower service tax liability of Rs.5,98,087/- for the period in question. Upon hearing the arguments, the judges were inclined to believe that the applicants are indeed liable to pay service tax on the mentioned activity for the period 18/04/2006 to 30/04/2006 under the category of banking and financial services. Consequently, the tribunal directed the applicant to make a pre-deposit of Rs.5,98,087/- within four weeks and report compliance by a specified date. Upon such compliance, the balance amount of service tax, interest, and penalty would be waived, and the recovery thereof stayed during the appeal process. The judgment emphasizes the importance of complying with the tax obligations as determined by the authorities while providing an opportunity for the applicant to address the issue through the appeal process.
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