2015 (6) TMI 119 - AT - Service Tax

Holiday Voucher Services Not Taxable: Tribunal Grants Waiver

The Tribunal held that the applicant's provision of accommodation services based on holiday vouchers did not constitute Business Auxiliary Service as they ... Waiver of pre deposit - Activity of providing accommodation on the basis of holiday voucher issued by their corporate clients - Business Auxiliary service - Held that:- The applicant is engaged in the activity of providing accommodation on the basis of holiday voucher issued by their corporate clients by arranging of accommodation on the direction of their clients to the customers who win the vouchers. Admittedly, all these activities has been provided by the applicant after sale is effected by their clients. When sale has been effected by their client, therefore, the question of promotion their business does not arise. In these circumstances, prima facie we are of the view that the activity undertaken by the applicant does not qualify under the category of Business Auxiliary Service - All the activities referred by the Hon'ble High Court [2013 (1) TMI 304 - GUJARAT HIGH COURT ] with regard the promotion of sale but here the applicant is providing all services after effecting the sale. Therefore, the said case law is not relevant to the facts of this case. In these circumstances, the applicant has made out a prima facie case of complete waiver of pre-deposit of service tax, interest and penalties, therefore, we waive the requirement of pre-deposit of entire amount of service tax, interest and penalty and stay recovery thereof, during pendency of the appeal. - Stay granted. Issues:- Whether the applicant is liable to pay service tax under the category of Business Auxiliary Service for providing accommodation services based on holiday vouchers issued by their corporate clients.Analysis:The judgment involves a case where the applicant sought waiver of pre-deposit of service tax, interest, and penalties confirmed against them under the category of Business Auxiliary Service. The applicant, engaged in sales promotion programs, provided accommodation services to customers who won vouchers issued by their corporate clients after product sales. The revenue contended that the applicant promoted the business of their clients by arranging accommodations, thus liable for service tax under Business Auxiliary Service. The Show Cause Notice led to the confirmation of service tax demand, interest, and penalties. Another demand was confirmed due to a discrepancy between ST-3 and the Balance Sheet, which the applicant paid. The applicant argued they were not promoting their clients' business as they did not deal with their clients' manufactured goods, hence not liable for service tax.The Revenue argued that the applicant's activity of providing customer care for their corporate clients fell under Business Auxiliary Service. They cited a Tribunal decision and definitions of sales promotion from various sources to support their stance. After hearing both parties and considering the submissions, the Tribunal had to determine whether the applicant's activities qualified as Business Auxiliary Service. The Tribunal found that the applicant provided accommodation services after the sale was completed by their clients, negating the aspect of promoting their business. The Tribunal distinguished the case law cited by the Revenue, stating it was not relevant to the current case. Consequently, the Tribunal held that the applicant had established a prima facie case for a complete waiver of pre-deposit of service tax, interest, and penalties. Therefore, the Tribunal waived the requirement of pre-deposit of the entire amount and stayed the recovery during the appeal process.