2010 (5) TMI 408 - AT - Service Tax

Waiver of pre-deposit - demand service tax on services and interest - appellants were engaged by M/s. APSRTC preparing bus pass identity cards - They produced new cards and renewed the existing passes. After due process of law the original authority found that this activity involved business auxiliary services (BAS) - Held that - activities involved are prima facie not covered under the category of Business Auxiliary Services. Lower authorities have not substantiated under which of the various categories of taxable activities enumerated under BAS the impugned activity is classifiable - activity was originally found to be liable under the category of photography services and that the related demand had been vacated by this bench - waiver of pre-deposit

Summary

Issues:
1. Waiver of pre-deposit and stay of recovery of service tax amount demanded.
2. Classification of services under "Business Auxiliary Services" or information technology services.
3. Claim of undue hardship due to financial losses.
4. Sustainability of the demand of service tax and penalties.

Analysis:
1. The application sought waiver of pre-deposit and stay of recovery of Rs. 10,38,813/- demanded as service tax on services classified under "Business Auxiliary Services" rendered by the appellant. The appellant claimed the activity was exempt under information technology services. The Tribunal noted the appellant's financial losses and previous Tribunal's order vacating a similar demand. The Tribunal found the impugned activity not covered under Business Auxiliary Services, ordered a complete waiver of pre-deposit, and stayed recovery pending appeal.

2. The appellant argued that the services provided were classifiable under information technology services, not Business Auxiliary Services. The lower authorities failed to specify the category under which the activity fell. The Tribunal found the activity prima facie not covered under Business Auxiliary Services. The previous demand under photography services, vacated by the Tribunal, was considered relevant. The Tribunal concluded that the appellant made a strong case against the demand and penalties.

3. The appellant claimed undue hardship due to financial losses suffered, supported by income tax returns and balance sheet. The Tribunal noted the lack of clarity in the schedules of the balance sheet but considered the appellant's argument. The financial hardship was a factor in the Tribunal's decision to grant a waiver of pre-deposit and stay recovery of the demanded amount.

4. The sustainability of the demand of service tax and penalties was questioned by the appellant, citing the previous Tribunal's order vacating a similar demand. The Tribunal found the impugned activity not falling under Business Auxiliary Services and ordered a complete waiver of pre-deposit and stay of recovery pending appeal. The Tribunal considered the appellant's arguments, the lack of clarity in the lower authorities' findings, and the previous order vacating a similar demand in reaching its decision.