2015 (10) TMI 573 - AT - Service Tax

Waiver of Pre-deposit BAS - nature of amount received - commission or discount on sale of goods Held That - Commission received by the Appellant was in relation to the material sold and would not fall within the scope of business auxiliary service - Stay Granted Decided in favour of the Appellant.

Summary

Issues:
1. Whether the appellant provided business auxiliary service but did not pay service tax.
2. Whether the appellant's contention regarding being a unit of another company affects the liability.
3. Whether the commission received by the appellant from Steel Authority of India constitutes a service or a sale transaction.

Analysis:

1. The appellant filed a stay application and appeal against an order-in-appeal, claiming they provided business auxiliary service but did not pay service tax. The appellant argued that they had already paid service tax for job work done and that the demand was based on commission and quantity discount received from Steel Authority of India, which they considered a sale transaction, not a service. The respondent contended that the appellant was registered as a service provider and provided business auxiliary service to SAIL, justifying the demand.

2. The appellant contended that being a unit of another company, they lacked separate legal existence and had paid service tax for job work. The Tribunal examined the agreement between M/s Shree Auro Iron Ltd. and SAIL, which outlined a commission structure related to material sales. The agreement specified that the commission was based on the invoice value of materials sold to the appellant, indicating a sale transaction rather than business auxiliary service. The Tribunal found merit in the appellant's argument regarding the nature of the commission and the payment for job work, leading to a decision in favor of waiving the pre-deposit and staying the recovery of the liability during the appeal process.

3. The Tribunal's analysis of the agreement between M/s Shree Auro Iron Ltd. and SAIL revealed that the commission received by the appellant was directly linked to the materials purchased, not to business auxiliary services. The appellant's payment of service tax for job work further supported their position that the demand was not justified. Consequently, the Tribunal concluded that the appellant had provided sufficient evidence to warrant a waiver of pre-deposit and ordered the stay of recovery for the disputed liability pending the appeal process.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved and the Tribunal's reasoning behind the decision to grant a stay on the recovery of the disputed liability.