2008 (12) TMI 364 - AT - Service Tax

Appellate Tribunal Grants Stay on Tax Recovery, Emphasizes Compliance and Detailed Examination

BHARAT SANCHAR NIGAM LTD. Versus COMMR. OF C. EX., VISAKHAPATNAM-II

The Appellate Tribunal CESTAT, Bangalore granted a stay on the recovery of the balance tax amount/interest/penalty until the appeal's disposal. The ... Stay- Pre-dispensation- Held that- out of the total demand of Rs. 90,47,8 the applicant has deposited Rs. 13,06,028/-. Further, the demand of Rs. 57.47 lacs seems to be prima facie not tenable. Since the applicant has deposited an amount of Rs. 13,06,028/-, we consider this amount as enough deposit to hear and dispose of the case. Subject to such compliance of deposit of interest, the application for waiver of the pre-deposit of the balance tax amount/interest/penalty is allowed and recovery thereof stayed till the disposal of the appeal. Issues: Stay application against waiver of pre-deposit of Service Tax, interest, and penalties.In this judgment by the Appellate Tribunal CESTAT, Bangalore, the issue involved was a stay application against the waiver of pre-deposit of Service Tax, interest, and penalties. The appellant had pre-deposited a partial amount out of the total demand of Rs. 90,47,811/-, and the Tribunal had to decide on the waiver of the remaining amount. The appellant's representative argued that the major amount demanded was on arrears collected from customers, and after exemptions, the net balance on which tax was payable came to Rs. 103.78 crores. The appellant had already paid a substantial amount of Rs. 9,73,28,470/- based on the rate of Service Tax applicable during the relevant period. The Revenue had calculated a flat 10% on the net balance, resulting in a significant differential duty amount of Rs. 57,47,182/-. The Tribunal noted the complexity of the issue and the voluminous records involved, indicating the need for a detailed examination of the taxability of Service Tax on various items.The learned JCDR argued that the Tax amount calculated in the Show Cause Notice and confirmed by the Adjudicating Authority was appropriate, and the applicant should be liable to pay interest on the Service Tax amount. After considering the submissions, the Tribunal found that the demand of Rs. 57.47 lacs appeared prima facie not tenable. Given that the appellant had already deposited Rs. 13,06,028/-, the Tribunal deemed this amount sufficient to proceed with the case. However, in agreement with the JCDR's contention, the Tribunal directed the appellant to calculate and deposit the interest on the accepted payable Service Tax amount within three months. The Tribunal granted a stay on the recovery of the balance tax amount/interest/penalty until the appeal's disposal, setting a compliance deadline for the interest deposit and scheduling the final disposal of the appeal for May 1, 2009. The judgment highlighted the importance of detailed examination in tax matters and the necessity for compliance with interest payment obligations to secure the waiver of pre-deposit.