2016 (4) TMI 690 - AT - Service Tax

Waiver of pre-deposit - Demand of Service tax, interest and penalty - Business support service under reverse charge mechanism - uplinking facility availed from overseas entity - Held that - by relying on the earlier decisions held that BSS would cover only the services which are supporting nature to the main business, like services relating to customer relationship telemarketing, office infrastructure, etc and would not cover the services of renting of machinery or equipment for production or manufacture, which is an activity relating to conduct of main business. The applicants have strong prima facie case in their favour and therefore, waiver of pre-deposit is granted for admitting the appeal. At this prima facie stage, by following the stay orders passed earlier it is found that, in similar set of facts, the present applicant has to be given full waiver of pre-deposit of adjudicated dues. - Stay and waiver granted

Summary

Issues:
1. Waiver of pre-deposit affirmed by the impugned order.
2. Service tax demand confirmed against the applicant.
3. Penalty imposed under Sections 78 and 77 of Finance Act, 1994.
4. Confirmation of service tax under Business Support Service and Information Technology Software Services categories.
5. Uplinking facility availed by the applicant from overseas entity.
6. Comparison with previous Tribunal decisions granting unconditional stay.
7. Examination of appeal records.

Analysis:
The judgment revolves around the applicant seeking a waiver of pre-deposit as per the impugned order, which confirmed a substantial service tax demand of Rs. 3,07,02,977 against them, along with penalties under Sections 78 and 77 of the Finance Act, 1994. The demand primarily pertained to services received from M/s. Intelsat Corporation London under Business Support Service and Information Technology Software Services categories. The core issue was the uplinking facility availed by the applicant from an overseas entity, leading to the initiation of proceedings via show cause notices spanning 2005-2006 to 2011-2012.

The applicant's counsel cited precedents where the Tribunal had unconditionally stayed similar cases, emphasizing the need for consistency in granting relief. Upon hearing both parties and reviewing the appeal records, the Tribunal noted that in analogous scenarios, previous decisions favored granting stay and waiving pre-deposit. Specifically, the Tribunal differentiated services supporting the main business from those directly related to production or manufacture, highlighting that Business Support Service should encompass ancillary functions like customer relationship management, telemarketing, and office infrastructure.

Relying on the principle that pre-deposit waiver should be granted when a strong prima facie case exists, the Tribunal found in favor of the applicant. Drawing parallels with past rulings, the Tribunal concluded that the applicant deserved full waiver of pre-deposit for the adjudicated dues, thereby ordering a stay on recovery during the appeal's pendency. This decision aligned with the Tribunal's consistent approach in similar cases, ensuring fairness and adherence to legal precedents.

In essence, the judgment underscores the importance of consistency in granting relief, especially when dealing with comparable factual circumstances. By aligning with past decisions and principles of prima facie merit, the Tribunal upheld the applicant's request for a waiver of pre-deposit, emphasizing the distinction between services ancillary to the main business and those integral to production activities. The ruling serves as a benchmark for ensuring equitable treatment and adherence to established legal interpretations in tax matters.