2015 (8) TMI 203 - AT - Service Tax

Tribunal Waives Pre-Deposit for Business Auxiliary Service & Advertisement Liability

The Tribunal granted a full waiver of pre-deposit for the Business Auxiliary Service demand, citing a precedent where no service tax applied to ... Waiver of pre deposit - Business Auxiliary service - service was imported from abroad - Reverse Charge Mechanism - Held that:- While as per Section 66A (2) explanation (1) a person carrying on a business through a branch or agency in any country shall be treated as having a business establishment in that country, we find that CESTAT in the case of M/s Torrent Pharmaceuticals Ltd. CST, Ahmedabad has held that no service tax is leviable on the remittances made to the branch office abroad. Having regard to the said judgment, we are of the view that the appellant has made out a good case for full waiver of pre-deposit of demand relating to Business Auxiliary Service. Advertizing on Newspaper - The appellant’s plea that the demand of ₹ 2,29,150/- confirmed under advertising agency service in respect of Show Cause Notice dated 18.4.2013 is not sustainable because this amount was paid directly to the newspapers for advertisement and not to any advertising agency and no such agency was engaged for providing any service connected with making preparation, display or exhibition of advertisement and therefore it did not fall within the scope of 65(3) read with 65(105)(e) is prima facie persuasive. - we waive the requirement of pre-deposit of the remaining adjudicated liability and stay recovery thereof during pendency of the appeal. - Stay granted. Issues:1. Service tax demand confirmed under reverse charge mechanism for Business Auxiliary Service.2. Service tax demand confirmed for advertisement service payment to newspaper.Analysis:1. The appellant filed a stay petition and appeal against the order confirming service tax demands under two Show Cause Notices. The demands were related to Business Auxiliary Service imported from abroad, triggering the reverse charge mechanism. The appellant argued that the remitted amount was for their representative office's expenses, which should be considered a service to self due to the office lacking separate legal existence. Additionally, a demand related to advertisement services was contested, as the payment to the newspaper did not fall under the category of advertising agency service. The Departmental Representative (D.R.) cited an explanation to Section 66A(2) of the Finance Act, 1994, stating that a representative office should be treated as a business establishment in that country, justifying the levy under reverse charge mechanism.2. The Tribunal examined both parties' contentions and referred to a previous judgment in the case of M/s Torrent Pharmaceuticals Ltd., where it was held that no service tax is applicable on remittances made to a branch office abroad. Considering this precedent, the Tribunal found merit in the appellant's argument for a full waiver of pre-deposit concerning the Business Auxiliary Service demand. Regarding the advertisement service demand, the Tribunal agreed with the appellant that the amount paid directly to newspapers for advertisements did not involve an advertising agency providing related services as per the relevant sections. Consequently, the Tribunal decided to waive the pre-deposit requirement for the remaining adjudicated liability and stayed the recovery during the appeal's pendency.