2013 (10) TMI 128 - AT - Service Tax

Waiver of Pre-deposit valuation - section 67 - import of services - reverse charge - consultancy services - transaction with associated enterprise - addition on account of amount debited or credited as the case may be - Held that - On a prima facie view, since the amendment to Section 67 and the complementary amendment to Rule (6) was subsequent to the period in issue in the present appeal, the liability to tax had been wrongly assumed in the adjudication order - Further the substantive component of the service tax liability as assessed had already been remitted - We therefore find a strong prima facie case in favour of the petitioner and therefore grant waiver of pre-deposit and stay of all further proceedings pursuant to the impugned order in appeal, pending disposal of the appeal Stay granted.

Summary

Issues: Waiver of pre-deposit and stay of proceedings for realisation of the adjudicated liability

Analysis:
The judgment by the Appellate Tribunal CESTAT NEW DELHI involved the issue of waiver of pre-deposit and stay of proceedings concerning the adjudicated liability as per an order passed by the Commissioner, Central Excise, Noida. The adjudication order assessed a tax liability of Rs.1,02,00,517/- on the petitioner for remittances made to an overseas associated company for taxable technical consultancy services during the period from 01.04.2006 to 31.03.2008. The liability was determined under the reverse charge mechanism based on ledger entries, not actual remittances. The petitioner contended that the liability arose only after the amendments to Section 67 and Rule 6 of the Service tax Rules introduced by the Finance Act, 2008, which was subsequent to the period in question. However, this argument was rejected by the adjudicating authority.

The Tribunal, upon a prima facie view, noted that the amendments to Section 67 and Rule 6 were made after the relevant period, leading to a conclusion that the tax liability was incorrectly assumed in the adjudication order. It was observed that the substantial part of the service tax liability had already been remitted by the petitioner. Consequently, the Tribunal found a strong prima facie case in favor of the petitioner and decided to grant waiver of pre-deposit and stay of all further proceedings related to the impugned order until the appeal is disposed of. The application seeking waiver of pre-deposit and stay of proceedings was thus disposed of in favor of the petitioner by the Tribunal.