2013 (10) TMI 585 - AT - Service Tax

Court grants waiver & stays proceedings in service tax assessment case.

The court granted a waiver of pre-deposit and stayed further proceedings in a case involving the assessment of service tax under three categories: reverse ... Business Auxiliary Services – Error in Computation of Education Cess - Held that:- The petitioner claims immunity under the provisions of Export of Service Rules, 2005 relying on the judgment of the Larger Bench in Paul Merchants Ltd. vs. C.C.E., Chandigarh 2012 (12) TMI 424 - CESTAT, DELHI (LB) ] - service tax is a value added tax, which in turn is a destination based consumption tax in the sense that it is levied on commercial activities, and it is not a charge on the business but a charge on the consumers - There is nothing in Export of Service Rules, 2005 which can be said to be contrary to the principle that a service not consumed in India is not be taxed in India - prima facie the issue waws in favour of the petitioner/assessee. Manpower Recruitment or Supply Agency – Waiver of Pre-deposit - Held that:- The petitioner relies on interim order passed in Paramount Communication Ltd. vs. C.C.E., Jaipur [2013 (3) TMI 134 - CESTAT NEW DELHI] - In view of consistent orders passed granting waiver of pre-deposit in aforesaid orders and the final order in Paramount Communication Ltd. - we see a strong prima facie case in favour of the petitioner in respect of the adjudicated tax liability under ‘manpower recruitment or supply agency’ service as well – Waiver of Pre-deposit was allowed in full and stayed till the disposal – Stay Granted. Issues:1. Assessment of service tax under three heads.2. Claim of immunity under Export of Service Rules, 2005 for Business Auxiliary Services.3. Error in computation of education cess.4. Reliance on previous orders for waiver of pre-deposit in the case of 'manpower recruitment or supply agency' service.5. Granting of waiver of pre-deposit and stay of further proceedings.Analysis:1. The judgment addresses the assessment of service tax amounting to approximately Rs.6.5 crores under three categories: (a) reverse charge mechanism for manpower recruitment or supply agency service, (b) commission received for providing Business Auxiliary Services, and (c) erroneous accounting of education cess. The petitioner challenges these assessments.2. Regarding the Business Auxiliary Services, the petitioner claims immunity under the Export of Service Rules, 2005, citing the judgment in Paul Merchants Ltd. vs. C.C.E., Chandigarh. The court notes that based on the decision in Paul Merchants Ltd., the issue appears to be in favor of the petitioner concerning the amounts assessed for Business Auxiliary Services.3. The adjudication order is found to have errors in the computation of education cess, specifically involving an amount of Rs.28,24,406. This discrepancy is highlighted as a separate issue in the judgment.4. In relation to the taxable service of 'manpower recruitment or supply agency,' the petitioner relies on interim and final orders in various cases, including M/s Volkswagen India (Pvt.) Ltd. and Paramount Communication Ltd. These orders have consistently granted waiver of pre-deposit. The court acknowledges a strong prima facie case in favor of the petitioner concerning the tax liability under this service.5. As a result of the analysis, the court grants a waiver of pre-deposit in full and stays all further proceedings following the impugned adjudication order until the appeal is resolved. The judgment also dismisses a miscellaneous application that has become irrelevant due to the order passed in the stay application.