2014 (4) TMI 1166 - AT - Service Tax

Tribunal grants rehearing due to notice issue, rejects service tax argument on DEPB scrips, dismisses challenge to extended tax demand period.

The Tribunal allowed a rehearing due to non-receipt of notice, rescheduling the hearing date. The appellant's argument against service tax on DEPB scrips ... Levy of tax - Business Support Service or not? - the appellant claimed that he was only purchasing and selling DEPB scrips and no service was rendered by him - extended period of limitation - Held that: - any service provided in relation to business or commerce would be covered by this definition. In this case, when the appellant entered into an agreement to complete all formalities required and documentation required to get DEPB scrips subject to condition that such DEPB scrips when received would be sold at a particular price which can be sold in the market for higher price would be clearly covered by ‘Business Support Service’ since this service is provided in relation to business or commerce to another service receiver - As regards there was no consideration, the very fact that there is a difference between face value of scrips and purchase price by the appellant and appellant can sell at higher price would show difference between sale price and purchase price is the consideration for undertaking work of obtaining DEPB scrips for the service receiver. The fact that the appellant paid service tax in respect of two companies, in our opinion, does not give raise to a conclusion that the appellant has entertained a bona fide belief regarding their liability on other transactions. The very fact that the other transactions were preceded by agreements and on a precondition of fixing price at which DEPB scrips would be given to the appellant would show that this case is on entirely different parameter. There is no evidence that the appellant has made efforts to ascertain their liability and in these circumstances, we consider that the appellants have not been able to make out a case for complete waiver. Appeal dismissed - decided against appellant. Issues:1. Compliance with pre-deposit order for hearing an appeal.2. Classification of service tax on the difference between face value and purchase value of DEPB scrips.3. Invocation of extended period for demand of service tax.4. Consideration of waiver of pre-deposit based on merits and limitation.Comprehensive Analysis:Issue 1 - Compliance with Pre-Deposit Order:The Tribunal had directed the appellant to deposit a specific amount for the purpose of hearing the appeal. The appellant sought a rehearing of the stay application, claiming they were unaware of the case listing due to non-receipt of notice. The Tribunal allowed the rehearing, considering the stay order was passed without hearing the appellant. The matter was rescheduled for a new hearing date.Issue 2 - Classification of Service Tax on DEPB Scrips:The appellant argued that they were solely involved in purchasing and selling DEPB scrips without providing any service. They contended that service tax was demanded on the entire difference between face value and purchase value, without considering the actual selling price of the DEPB scrips. The appellant also highlighted instances where they had paid service tax, indicating a bona fide belief that tax was not required for other transactions. The Revenue, however, argued that the difference in values constituted consideration for services under 'Business Support Service.'Issue 3 - Invocation of Extended Period for Demand:The appellant claimed that the extended period for invoking the demand of service tax was not justified, citing the initiation of the investigation in 2008 and their communication with the department since then. They argued against the applicability of the extended period in this case.Issue 4 - Waiver of Pre-Deposit based on Merits and Limitation:The Tribunal analyzed the submissions from both sides and found that the service provided by the appellant in relation to business or commerce fell under 'Business Support Service.' The consideration for services rendered was determined based on the difference between face value and purchase price of DEPB scrips. While the appellant believed they were not liable for tax based on past payments, the Tribunal concluded that the circumstances of other transactions differed significantly. Considering the partial sustainability of the demand and the lack of evidence regarding liability assessment, the Tribunal granted a waiver of pre-deposit subject to the appellant depositing a specified amount within a set timeframe.In conclusion, the Tribunal's judgment addressed compliance issues, the classification of service tax on DEPB scrips, the invocation of the extended period for demand, and the waiver of pre-deposit based on the merits and limitations of the case.