Business Auxiliary Services classification: staff-supply arrangement to group companies justified waiver of pre-deposit and recovery stay.

A prima facie review of the memorandum of association and the service arrangement indicated that the assessee was recruiting staff and supplying them to group companies for their activities. On that interim assessment, the arrangement did not appear to fall within Business Auxiliary Services under the Finance Act, 1994. The appellant was therefore held entitled to waiver of pre-deposit and protection from recovery during pendency of the appeal, pending final determination of the tax classification issue.

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Issues: Whether the appellant had made out a prima facie case for waiver of pre-deposit and stay of recovery in a dispute as to whether the services rendered to group companies fell within Business Auxiliary Services.

Analysis: On a prima facie examination of the memorandum of association and the nature of the arrangement, the appellant appeared to be recruiting staff and supplying them to group companies for their activities. Such an arrangement, at the interim stage, did not appear to fall within the scope of Business Auxiliary Services under Section 65(90) of the Finance Act, 1994. In view of this prima facie view, the appellant was found entitled to protection against pre-deposit and recovery during the pendency of the appeal.

Conclusion: The appellant was granted unconditional waiver from pre-deposit and recovery was stayed pending disposal of the appeal.

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