2013 (7) TMI 235 - AT - Service Tax

Tribunal affirms service tax classification for appellant, orders pre-deposit.

The Tribunal upheld the classification of the appellant's service under 'Business Support Services' (BSS) rather than a sale of goods, requiring service ... Business Support Services - renting of immovable property versus sale of goods - infrastructural support services - adjudicatory jurisdiction - time bar and suppression of facts - pre-deposit for interim reliefAdjudicatory jurisdiction - jurisdictional challenge to adjudication by the Commissioner - HELD THAT: - The Tribunal records that the jurisdictional point has already been considered and decided in favour of Revenue by this Tribunal in Order No. M/322-362/13/CSTB/C-I dated 21.2.2013. Consequently, the objection that the Commissioner lacked power to adjudicate was not entertained afresh and the earlier conclusion in favour of Revenue stands. [Paras 5]Jurisdiction upheld in favour of Revenue as per earlier orderBusiness Support Services - renting of immovable property versus sale of goods - infrastructural support services - classification of the appellant's activity as a service under Business Support Services rather than as sale or renting of immovable property - HELD THAT: - On a prima facie consideration of the concessionaire agreement and the mode of conduct, the Tribunal finds that the appellant granted concessionaires a right to display, demonstrate and sell products from demarcated display counters and received consideration as a percentage of sales subject to a minimum guarantee, with no rental charged according to area. Although certain obligations remained with concessionaires, they nonetheless used the Retail Store's common facilities - including common billing and collection, air-conditioned space, lighting, security and other customer-oriented amenities - which fall within the concept of infrastructural support and transaction processing. Having regard to the legislative definition of support services which expressly includes infrastructural support services and accounting and processing of transactions, the activity prima facie falls within Business Support Services rather than renting of immovable property or a mere sale transaction. [Paras 5]Prima facie classification under Business Support Services upheldTime bar and suppression of facts - whether the demand is time barred and whether there was suppression of facts - HELD THAT: - The Tribunal holds that the question of limitation involves both fact and law and cannot be finally decided at the interim stage. It notes that the appellant did not assert that it had voluntarily disclosed the activity to the department and observes that the matter surfaced following departmental investigation. On the limited material before it, the Tribunal declines to conclude that there was no suppression of facts and directs that the time-bar issue be examined in detail at the final hearing. [Paras 5]Time-bar issue left open for final adjudication; not finally decided at interim stagePre-deposit for interim relief - interim relief and conditions for grant of stay of recovery - HELD THAT: - Applying the principles for grant of interim relief - prima facie case, balance of convenience and irreparable harm - and noting absence of pleaded financial hardship by the appellant and the prima facie findings favouring Revenue, the Tribunal finds no case for full stay. It directs that the appellant make a pre-deposit of 50% of the confirmed service tax demand within eight weeks; on such compliance the balance of the adjudged dues is waived for the purpose of recovery and recovery of the balance is stayed during the pendency of the appeal. [Paras 5, 6]Appellant directed to pre-deposit 50% of the demand; balance stayed on complianceFinal Conclusion: The Tribunal, while recording that jurisdiction has been upheld earlier in favour of Revenue, prima facie classifies the appellant's activity for the period 1-5-06 to 31-5-07 under Business Support Services, leaves the limitation issue open for final adjudication, and grants only conditional interim relief by directing a pre-deposit of 50% of the confirmed service tax demand with the balance stayed on compliance. Issues involved:Classification of service provided by the appellant under 'Business Support Services' (BSS), Jurisdiction of the Commissioner, Scope of service tax levy, Time bar on demand, Waiver of penalty under section 80 of the Finance Act, 1994, Financial hardship plea, Balance of convenience for grant of interim stay.Classification of service under 'Business Support Services' (BSS):The appellant, a retail store operator, provided concession to display, demonstrate, and sell products in their stores. The department classified this service under BSS, demanding service tax. The appellant argued that the transaction was a sale of goods, not a service, as VAT was paid on transactions. However, the Tribunal found that the activity did not qualify as renting of immovable property and included infrastructural support services. The Tribunal noted that the appellant provided facilities attracting customers to the retail mall, falling under BSS as per the Finance Act, 1994.Jurisdiction of the Commissioner:The appellant challenged the jurisdiction of the Commissioner, claiming that the Chief Commissioner did not have the power to delegate adjudication. The Tribunal had previously ruled in favor of the Revenue on this issue, upholding the Commissioner's jurisdiction.Scope of service tax levy:The appellant contended that post-1-6-07, they paid service tax under 'renting of immovable property' category, which should apply to the previous period. However, the Tribunal held that if service tax was paid post-1-6-07, the activity could not be considered a sale for the prior period, as claimed by the appellant.Time bar on demand:The appellant argued that the demand was time-barred due to their belief about service tax liability before 1-6-07. The Tribunal noted that the issue of suppression of facts and the time bar would be examined in detail during the final hearing, as the department discovered the matter through investigation.Waiver of penalty under section 80 of the Finance Act, 1994:The appellant sought penalty waiver under section 80 of the Finance Act, 1994. However, the Tribunal did not find financial hardship pleaded by the appellant and cited a High Court decision emphasizing the need to consider a prima facie case, balance of convenience, and irreparable loss to Revenue for granting interim stay.Balance of convenience for grant of interim stay:Considering the lack of a prima facie case in favor of the appellant and the absence of financial hardship, the Tribunal directed the appellant to make a pre-deposit of 50% of the service tax demand within eight weeks. Compliance would lead to waiving the balance of dues and staying recovery during the appeal's pendency.