2017 (6) TMI 378 - AT - Service Tax

Levy of service tax - commission earned by the appellant acting as foreman conducting the chit funds - Held that - During the period of dispute, there were two streams of decisions - one stream holding that the activity is liable to levy of service tax and the other stream holding the opposite view. It is also on record that the matter is pending before the apex court for a final view in the matter - the issue requires reconsideration and that this is a fit case to be heard in its turn without insisting upon pre-deposit of the duty demand - appeal allowed by way of remand.

Summary

Issues involved: Stay petition for depositing 50% of Service Tax, conflicting judgments on levy of service tax on commission earned by foreman conducting chit funds, reconsideration of Tribunal's stay order, modification of stay petition, waiver of pre-deposit.

Analysis:

1. Stay petition and deposit of Service Tax:
The appellants, M/s. Kapil Chits (Karnataka) Pvt. Ltd., filed miscellaneous applications connected with appeal No. ST/21237-21240/2014. The Tribunal had earlier directed them to deposit 50% of the Service Tax within six weeks as a condition for hearing their appeals. The appellants approached the High Court challenging the Tribunal's stay orders, which was later withdrawn with liberty to file necessary applications before the Tribunal for modification of the stay order.

2. Conflicting judgments on levy of service tax:
The main issue in this case revolves around the levy of service tax on the commission earned by the appellant while acting as a foreman conducting chit funds. The period in question is before 1.7.2012, during which conflicting decisions were prevalent. The Andhra Pradesh High Court held that no service tax is leviable on such commissions, while the Kerala High Court held the opposite. The appellant argued that in cases of contradictory judgments, the benefit should be given to the assessee by waiving duty demand and granting a stay during the appeal process, citing relevant case laws to support this argument.

3. Reconsideration of Tribunal's stay order:
Given the conflicting decisions and the pendency of the matter before the apex court, the Tribunal found it necessary to reconsider the directions granted in the stay order dated 12.10.2015. Considering the findings of various High Courts and the arguable nature of the case due to conflicting judgments, the Tribunal concluded that it was a fit case to be heard without insisting on the pre-deposit of the duty demand raised in the impugned order.

4. Modification of stay petition and waiver of pre-deposit:
Based on the above discussions and analysis, the Tribunal decided to modify the stay petition dated 12.10.2015 and allowed the miscellaneous applications filed by the appellant. This decision was made to ensure that the case is heard without requiring the pre-deposit of the duty demand, considering the circumstances and the conflicting legal precedents involved.

This detailed analysis of the judgment highlights the key issues, arguments presented, relevant legal precedents cited, and the final decision made by the Tribunal regarding the modification of the stay order and the waiver of pre-deposit in this case.