2014 (8) TMI 665 - AT - Service Tax

Waiver of pre-deposit - Information Technology Literacy Course - Business Auxiliary Service - Held that - Prima facie the activity of MKCL is not in the nature of business. Therefore, the service rendered by the applicants prima facie does not fall under Business Auxiliary Service. Accordingly, we waive the requirement of pre-deposit of entire amount of Service Tax, interest and penalty and stay recovery thereof during the pendency of the appeal - Stay granted.

Summary

Issues involved:
1. Waiver of pre-deposit of impugned demands confirmed against the applicants.
2. Determination of whether the services provided fall under Business Auxiliary Service category.

Analysis:
Issue 1: Waiver of pre-deposit
The applicants sought waiver of pre-deposit of the demands confirmed against them by impugned orders related to services provided to M/s. Maharashtra Knowledge Corporation Ltd. (MKCL). The services included promotion, marketing, evaluation, development, public relations, management, supervision, and sale of MKCL's services. MKCL offers Information Technology Literacy Course MS-CIT, involving various components like reading, e-learning sessions, hands-on practice, learning facilitation, academic interactions, assessment, and collaboration. A show cause notice was issued for Service Tax demand on the basis of Business Auxiliary Service. However, after examining the services provided by the applicants and the nature of MKCL's activities, it was found that MKCL's activity is not in the nature of business. Consequently, the service rendered by the applicants was prima facie determined not to fall under Business Auxiliary Service. As a result, the Tribunal waived the requirement of pre-deposit of the entire amount of Service Tax, interest, and penalty, and stayed the recovery during the appeal process.

Issue 2: Classification of services under Business Auxiliary Service
The crux of the issue was whether the services provided by the applicants to MKCL could be categorized under Business Auxiliary Service for the purpose of Service Tax. Upon scrutiny, it was observed that the nature of MKCL's activity did not align with typical business operations. Consequently, the Tribunal concluded that the services rendered by the applicants to MKCL did not prima facie fall under the ambit of Business Auxiliary Service. This determination led to the decision to waive the pre-deposit requirement and stay the recovery of the demanded amounts during the pendency of the appeal. The decision was based on the finding that the applicants' services were not in the realm of Business Auxiliary Service due to the nature of MKCL's operations, which were not considered business-oriented.

In summary, the judgment by the Appellate Tribunal CESTAT MUMBAI involved the waiver of pre-deposit of demands confirmed against the applicants and the determination that the services provided did not fall under the category of Business Auxiliary Service. The decision was made after assessing the nature of MKCL's activities and the services rendered by the applicants, ultimately leading to the conclusion that the pre-deposit requirement should be waived, and the recovery stayed during the appeal process.