Prima facie case for waiver of pre-deposit where liquor supplier discounts were not treated as Business Auxiliary Service consideration.

In a service tax appeal, the tribunal held that the appellant had made out a prima facie case for waiver of pre-deposit where discounts received on liquor sales were treated by the department as consideration for Business Auxiliary Service. The materials indicated that the hotel operator was only selling liquor and receiving supplier discounts linked to sales volume, not income for any taxable service. On that interim view, pre-deposit of service tax and penalty was waived and recovery was stayed pending disposal of the appeal.

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Issues: Whether, for the purpose of waiver of pre-deposit in the service tax appeal, the appellant had made out a prima facie case against the demand raised by treating the discounts received on liquor sales as consideration for Business Auxiliary Service.

Analysis: The appellant was engaged in hotel business and sold liquor in its hotels. The demand proceeded on the basis that amounts shown in the books as sales promotion represented consideration for Business Auxiliary Service, while the appellant maintained that the discounts received from its supplier were linked to sales volume and could not be treated as income from such service. On a prima facie view, the materials indicated that the appellant was only selling liquor and receiving discounts from the supplier, and that the appellant had a strong case at the interim stage.

Conclusion: Waiver of pre-deposit of service tax and penalty was granted and recovery was stayed till disposal of the appeal.

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