2009 (10) TMI 565 - AT - Service Tax

Tribunal Orders Rs. 50,000 Pre-Deposit for Tax Appeal Stay; Compliance Deadline Set

The Tribunal directed the applicants to make a pre-deposit of Rs. 50,000 within four weeks. Upon compliance, the balance tax, interest, and penalty would ... Waiver of pre-deposit – penalty - for the reason that the payment for the courier service rendered by the applicants was not received in convertible foreign exchange – applicants stated that this condition was not made applicable to persons rendering courier service – Held that: - condition that payment should be received by the service provider by convertible foreign exchange - pre-deposit is required to be made by the applicants Issues: Application for waiver of pre-deposit and penalty in a tax dispute regarding courier services.Analysis:The judgment pertains to an application for waiver of pre-deposit of Rs. 4,10,987/- and an equal amount of penalty in a tax dispute related to courier services provided during the period of 16-3-2005 to 15-6-2005. The demand was confirmed due to non-receipt of payment for courier services in convertible foreign exchange. However, it was noted that the condition requiring payment in foreign exchange was not applicable to courier services during the disputed period but was imposed later through a notification dated 7-6-05. Additionally, the argument that the service provider being in India contradicted the requirement for the service recipient to be outside India was deemed not applicable to the applicants, as per Notification No. 9/2005-S.T., dated 3-3-2005. Since the condition regarding foreign exchange payment came into effect after the disputed period, a partial pre-deposit was deemed necessary.The Tribunal directed the applicants to make a pre-deposit of Rs. 50,000 within four weeks, considering the estimated service tax liability for June 2005 to be around Rs. 80,000 and for the period of 7-6-2005 to 15-6-2005 to be approximately Rs. 50,000. Upon compliance with this pre-deposit, the balance tax, interest, and penalty would be waived, and recovery stayed pending the appeal. Failure to adhere to this directive would lead to the vacation of the stay and dismissal of the appeal without prior notice. The compliance report was scheduled to be submitted by 26-11-2009. The judgment was dictated and pronounced in open court by the Vice-President of the Appellate Tribunal CESTAT, Chennai, Ms. Jyoti Balasundaram.