2018 (4) TMI 909 - AT - Service Tax

Waiver of pre-deposit - Valuation - inclusion of free services provided by M/s. Bharti Airtell and the services for which M/s. Bharti Airtell have charged certain amounts from the applicant - Whether the appellants be granted full waiver of pre-deposit of Service Tax, fine and penalty for stay of operation of impugned order as held by Member (Judicial)? - Difference of opinion - majority order. Held that - M/s Airtel are discharging service tax on provision of such seats under the category of business support service. On perusal one of the sample invoice, I note that they have charged service tax from the appellant, which was also paid. It is not clear that whether any demand proceedings were raised against M/s Airtel in respect of such seats for which no monetary consideration was mentioned in the arrangement - the business support service provided by M/s Airtel is the first stage of verification which necessarily forms input service for the appellant and the provision of management, maintenance and repair service back to M/s Airtel. All these aspects require much closer scrutiny at the time of final disposal of appeal - the appeal may be admitted without insisting on pre-deposit for a final decision. In view of the majority decision the appeal can be admitted without insisting on pre-deposit. Accordingly, application for waiver of pre-deposit is allowed till disposal of the appeal.

Summary

Issues Involved:
1. Inclusion of free services provided by M/s. Bharti Airtel in the assessable value.
2. Inclusion of reimbursed amounts for infrastructure and staff welfare charges in the taxable value.
3. Requirement of pre-deposit for stay of operation of the impugned order.

Issue-wise Detailed Analysis:

1. Inclusion of Free Services in Assessable Value:
The applicant provided Maintenance, Management, or Repair Services to M/s. Bharti Airtel Limited, which supplied office space and infrastructure free of cost. The Revenue argued that these free services should be included in the assessable value of the services provided by the applicant. The applicant, however, relied on the decision of the Larger Bench in Bhayana Builders Pvt. Limited Vs. Commissioner, arguing that free supplies are not includable in the assessable value. The Tribunal found that the applicant made a prima facie case based on this precedent and granted a waiver of pre-deposit for the service tax, interest, and penalties related to the free services.

2. Inclusion of Reimbursed Amounts in Taxable Value:
The applicant reimbursed M/s. Bharti Airtel for providing 1200 seats and staff welfare charges, paying service tax on these amounts. The Revenue contended that these reimbursed amounts should be included in the taxable value. The applicant argued that these were input services for which they had already paid service tax, and thus should not be part of the assessable value. The Tribunal agreed with the applicant, noting that these amounts were input services and did not form part of the taxable service provided by the applicant. Consequently, a waiver of pre-deposit of the entire amount of service tax, interest, and penalties was granted during the pendency of the appeal.

3. Requirement of Pre-deposit:
There was a difference of opinion between the Members on whether the appellants should be granted a full waiver of pre-deposit or required to deposit ?1 crore. The Member (Judicial) held that the appellant had a strong prima facie case and granted a full waiver. The Member (Technical) required a pre-deposit of ?1 crore, arguing that the free services provided by M/s. Bharti Airtel constituted non-monetary consideration that should be included in the taxable value. The matter was referred to a third Member, who noted that the issue was debatable and required closer scrutiny. The third Member concluded that the appeal should be admitted without insisting on pre-deposit, as there was no clear evidence that the non-monetary consideration influenced the taxable value. Consequently, the majority decision allowed the application for waiver of pre-deposit until the disposal of the appeal.

Majority Order:
The appeal was admitted without insisting on pre-deposit, and the application for waiver of pre-deposit was allowed until the disposal of the appeal.