2009 (4) TMI 80 - AT - Service Tax

CESTAT Chennai Waives Service Tax Predeposit & Penalties on Consignment & Business Auxiliary Services

The Appellate Tribunal CESTAT CHENNAI granted a total waiver of predeposit of service tax and penalties amounting to Rs. 95,95,153/- imposed on the ... Waiver of pre-deposit - stay of recovery - limitation bar - extended period of limitation - suppression of facts with intent to evade duty - classification of services as 'Business Auxiliary Service' vis-a-vis 'Clearing & Forwarding Agent'Waiver of pre-deposit - stay of recovery - penalty against principal and agent - Applications for waiver of pre-deposit of confirmed service tax and for stay of recovery of tax and penalties were allowed. - HELD THAT: - The Tribunal found that the applicants made out a strong prima facie case for total waiver of the pre-deposit and for a stay of recovery of the confirmed service tax and penalties. The demand related to services for the period 01.07.2003 to 08.07.2004 and arose from a show cause notice dated 13.06.2006. The Tribunal noted that the same Agreement and activity had earlier been the subject-matter of proceedings in which the Tribunal had set aside a demand characterising the activity as 'Clearing & Forwarding Agent', and that the Department was aware of the activity. In view of these circumstances and the absence of a decisively adverse prima facie view against the applicants on merits, the Tribunal exercised its discretion to waive the pre-deposit and to stay recovery of the tax and penalties pending the appeals. [Paras 3]Pre-deposit waived and recovery of tax and penalties stayed pending appeal.Limitation bar - extended period of limitation - suppression of facts with intent to evade duty - The demand was prima facie barred by limitation and the extended period of limitation was not attracted as there was no prima facie suppression with intent to evade duty. - HELD THAT: - The Tribunal recorded that the demand covered the period 01.07.2003 to 08.07.2004 and was raised by a show cause notice dated 13.06.2006. Given that the Department had knowledge of the applicants' activity and that the same Agreement had been the subject of earlier proceedings (in which the Tribunal rejected Revenue's interpretation), the Tribunal concluded that the applicants could not be prima facie held guilty of suppressing facts with intent to evade duty. Consequently, the extended period of limitation could not be invoked on the present material, and the demand was prima facie barred by limitation. [Paras 3]Demand prima facie barred by limitation; extended period not attracted for lack of suppression with intent to evade.Final Conclusion: The Tribunal granted total waiver of the pre-deposit and stayed recovery of the confirmed service tax and penalties in respect of the period 01.07.2003 to 08.07.2004, holding prima facie that the demand was time-barred and that there was no prima facie suppression to invoke the extended period of limitation. Issues:Waiver of predeposit of service tax and penalties under Section 73(1) for Consignment agency service and Business Auxiliary Service.Analysis:The judgment by the Appellate Tribunal CESTAT CHENNAI, delivered by Ms. Jyoti Balasundaram, Vice President, and Mr. P. Karthikeyan, Member (T), dealt with applications for waiver of predeposit of service tax of Rs. 95,95,153/- confirmed under the proviso to Section 73(1) along with interest, and penalties imposed on various parties. The demand was confirmed on the basis that M/s. Mahaveer Generics was involved in Consignment agency service, attracting liability for service tax under 'Business Auxiliary Service.' Additionally, M/s. Cipla was penalized as the principal company whose products were promoted by M/s. Mahaveer Generics.The Tribunal found that a strong prima facie case for total waiver existed due to the demand being time-barred. The demand covered the period from 01.07.2003 to 08.07.2004 and was raised in a Show Cause Notice dated 13.06.2006. The Tribunal noted that the activity of M/s. Mahaveer Generics was well-known to the department, and service tax was previously demanded under a different category, which was later set aside by the Tribunal. The Tribunal held that there was no suppression of facts by the applicant to evade payment of duty, negating the need for the extended period of limitation. Consequently, the Tribunal waived the pre-deposit of service tax and penalties imposed on the applicants, staying the recovery pending the appeals.In conclusion, the judgment focused on the waiver of predeposit of service tax and penalties under Section 73(1) concerning Consignment agency service and Business Auxiliary Service. The Tribunal's decision was based on the grounds of the demand being time-barred, lack of suppression of facts by the applicant, and the previous Tribunal rulings on the matter. The waiver was granted, and recovery of the service tax and penalties was stayed pending the appeals.