2015 (1) TMI 341 - AT - Service Tax

Business Auxiliary Service - marketing of agro-chemicals in the United States of America - registration from United States Environmental Protection Authority - To obtain this registration, they were required to provide technical data/information about the products. They obtained such information from the various other companies in USA by paying Data Access Fee - Held that - Appellant has bought/procured technical data readily available from the company situated in USA. It is not a case where the technical data was generated by testing the products of the appellant and studying their effects on environment. The said testing was conducted much before the product was manufactured and it was done not keeping in mind the appellant s requirement. The data is available off the shelf to all for a price. Therefore, we do not agree with the findings of the adjudicating authority that the access of data by the appellant comes within the purview of Business Auxiliary Service . Prima facie appellant had made out a strong case in their favour. - Stay granted.

Summary

Issues:
1. Whether the acquisition of technical data by the appellant is leviable to Service Tax under the category of 'Business Auxiliary Service'?
2. Whether the demand of Service Tax under 'Business Auxiliary Service' is sustainable in law?
3. Whether the appellant is entitled to a waiver of pre-deposit of dues adjudged against them and a stay on recovery during the appeal?

Analysis:
1. The appellant, M/s. United Phosphorus Ltd., sought to market agro-chemicals in the United States and obtained technical data from companies in the USA by paying Data Access Fees. The department contended that acquiring this data for promoting or marketing/selling goods in the USA falls under 'Business Auxiliary Service' and directed the appellant to pay Service Tax of &8377; 3,01,40,045 for the period 18-4-2006 to 30-6-2009, along with penalties. The appellant argued that the data was readily available, not specifically created for them, and the foreign company did not undertake activities to promote or market their goods. Hence, they claimed the activity did not fall under 'Business Auxiliary Service.'

2. The Tribunal observed that the technical data was procured by the appellant from a company in the USA, which was not generated by testing the appellant's products. The testing was conducted independently of the appellant's requirements and the data was available off the shelf for a price. Therefore, the Tribunal disagreed with the adjudicating authority's view that the acquisition of data by the appellant constituted 'Business Auxiliary Service.' Consequently, the demand of Service Tax under this category was deemed unsustainable in law.

3. After considering the submissions, the Tribunal found that the appellant had a strong case in their favor. As a result, the Tribunal granted a waiver of pre-deposit of the dues adjudged against the appellant and stayed the recovery of the amount during the pendency of the appeal. This decision was made to provide relief to the appellant while the appeal process was ongoing, indicating a favorable outcome for the appellant based on the arguments presented.

This detailed analysis of the judgment highlights the key issues involved, the arguments presented by both parties, and the Tribunal's decision on each issue, ensuring a comprehensive understanding of the legal aspects and implications of the case.