Tribunal Upheld Service Tax Demand on Business Support Service Despite Postal Department's Tax Payment

The Tribunal upheld the service tax demand on 'Business Support Service' provided by the appellant to the postal department, despite the department already paying tax on speed post services. The appellant's argument that no additional liability should exist was rejected, as the Tribunal ruled that the appellant's commission from canvassing speed post services warranted service tax. The Tribunal directed the appellant to make a 50% pre-deposit of the confirmed tax demand, with the balance to be waived upon compliance. The appeal was scheduled for final hearing alongside the Revenue's appeal.

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Issues Involved:
Service tax demand on business support service rendered to postal department.

Analysis:
The appeal and stay petition were filed against Order-in-Appeal No. 289 dated 22/07/2013 passed by the Commissioner of Central Excise & Service Tax (Appeals-IV), Mumbai - I. The impugned order confirmed a service tax demand of Rs. 1,96,759/- along with interest on 'Business Support Service' provided by the appellant to the postal department. The appellant argued that since the postal department pays service tax on the speed post services, there should be no additional liability for the appellant. The appellant cited a case where a franchisee was not liable for service tax separately when the courier agency had already paid it. However, the Revenue contended that the appellant rendered business support service by canvassing speed post services for the postal department, for which they received a commission, and thus, service tax was applicable on this commission. The Tribunal noted that under the service tax regime, the liability to pay service tax arises for the one rendering the taxable service, irrespective of whether the recipient has paid tax on the input service. The Tribunal directed the appellant to make a pre-deposit of 50% of the confirmed service tax demand within eight weeks, with the balance to be waived upon compliance. The appeal was tagged for final hearing along with the Revenue's appeal on 12th November, 2014.

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