2015 (4) TMI 495 - AT - Service Tax

Waiver of predeposit of service tax - Business Auxiliary Service - relevant clause of section 65(19) was not mentioned in the SCN - Penalty u/s 78 - Held that - Show-cause notice though does not mention the specific clause of Section 65 (19) of the Finance Act, 1994, the definition of BAS, however, is clearly spelt out in the impugned show-cause notice alleging that the Applicant has provided aforesaid services for and on behalf of their clients - Commissioner has, after considering the relevant facts, arrived on the conclusion that in the present case, the Applicant was involved in rendering services which are incidental and auxiliary to the service of procurement of goods from services, which are inputs for client falling under Clause (iv) and hence would fall under clause (vii) of Section 65 (19) of the Finance Act, 1994, as amended. We also find that the ld.Commissioner has categorically recorded that in spite of several reminders, the Applicant did not submit particulars of such services during the relevant period, so as to enable the Department to compute the service tax liability. - Prima facie case not in favour of assessee - Partial stay granted.

Summary

Issues: Application for waiver of predeposit of service tax and penalty under Section 78 of the Finance Act, 1994.

Analysis:
1. The applicant provided various services to clients but disputed the show-cause notice's validity for not mentioning the relevant clause of Section 65(19) of the Finance Act, 1994. The applicant argued that a similar case involving their sister concern was classified differently. They also claimed regular payment of service tax since 2010 and asserted the demand was time-barred. The bill amount included statutory dues not considered for abatement. The appellate tribunal found the notice valid, considering the services provided as incidental and auxiliary to client services under Section 65(19) of the Act. The tribunal directed a 10% deposit of confirmed duty within eight weeks for a waiver of the balance amount pending appeal.

2. The Department contended that the applicant withheld information, leading to delayed investigations. They argued that the applicant's prior knowledge of service tax obligations indicated suppression of facts. The Department highlighted the applicant's receipts from a client and discrepancies in service tax payments. They stressed that the High Court's judgment didn't address the taxability issue. The tribunal acknowledged both sides' arguments but required detailed examination of facts and evidence for a final decision. The tribunal ruled in favor of a partial waiver, instructing a 10% deposit and stayed recovery pending appeal.