Tribunal grants waiver for pre-deposit on service tax liability pre-16.05.2008

The Tribunal granted the appellant's application for waiver of pre-deposit concerning service tax liability related to Management or Business Consultant Services rendered before 16.05.2008 under the Finance Act, 1994. The Tribunal noted the appellant's compliance post the mentioned date and stayed the recovery process for the remaining amounts until the appeal's final disposal.

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Issues:
Waiver of pre-deposit of service tax, interest, and penalties under Finance Act, 1994 for Management or Business Consultant Services rendered during 2006-07 to 2009-10 on the basis of reverse charge mechanism.

Analysis:
The appellant filed a stay petition seeking the waiver of pre-deposit of service tax amounting to Rs. 58,45,029/-, along with interest and penalties under the Finance Act, 1994, related to the provision of Management or Business Consultant Services during the period from 2006-07 to 2009-10. The adjudicating authority confirmed the service tax liability on the basis that the appellant had rendered services using the reverse charge mechanism, specifically by paying an amount to a person situated abroad for purchasing the SAP system, also known as ERP.

Upon hearing both parties and examining the records, the Tribunal noted a precedent set by a coordinate Bench in the case of IBM India Pvt. Limited vs. Commissioner of Service Tax Bangalore 2010 (17) STR 317 (Tri. Bang.). In this case, it was established that services related to the implementation of ERP systems fall under the category of Information and Technology Services effective from 16.05.2008. The Tribunal acknowledged that the appellant had deposited the service tax liability post the mentioned date, and the disputed service tax pertained to transactions that occurred before 16.05.2008. Referring to the case law, the Tribunal observed that the Revenue had appealed the matter to the Apex Court, which was subsequently dismissed, indicating finality regarding the service tax liability on ERP Implementation Services before 16.05.2008.

Consequently, the Tribunal found that the appellant had presented a prima facie case for the waiver of pre-deposit concerning the amounts involved before 16.5.2008. As the appellant had already deposited the entire service tax liability and interest post 16.5.2008, the Tribunal granted the application for the waiver of pre-deposit for the remaining amounts and stayed the recovery process until the appeal's final disposal. The decision was dictated and pronounced in the Court by Mr. M.V. Ravindaran.

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