ORDER
P.G. Chacko, Member (J)
1. In the case of M/s. Fifth Avenue, the challenge is against a demand of service tax of over Rs. 1.8 crores in the category of “Business of Auxiliary Service” (BAS, for short) for the period 01.07.2003 to 18.04.2006 as also against a further demand of service tax of over Rs. 9 lakhs in the same category for the period 09.07.2004 to 30.09.2006. This party has also challenged the penalties imposed on them. In the other case of M/s. Fifth Avenue Wind Mill Pvt. Ltd., the appellant challenges total demand of service tax of over Rs. 89.5 lakhs. This demand includes an amount of over Rs. 13.6 lakhs for the period 09.07.2004 to 31.03.2006 and the remaining for the period 15.03.2005 to 30.09.2006. They also challenge the penalties imposed on them. The present applications seek waiver of predeposit and stay of recovery in respect of the amounts of service tax, interest and penalties.
2. After examining the records and hearing both sides, we note that a major part of the demand raised on each of the assessees is in the category of “Business Auxiliary Service” falling under Section 65(19) of the Finance Act, 1994 and that, against this demand, the contention of the assessees is that they had not rendered the above kind of service and that the services rendered by them fell in the category of “support services of business or commerce” falling under Section 65(104c) of the Act, which was introduced with effect from 01.05.2006. The appellants were admittedly rendering the service of evaluating prospective customers, processing of purchase orders, customer management, processing of transactions, information and tracking delivery schedule, operational assistance for marketing, formulation of customer service and packing policies, managing distribution logistics and other co-ordination services in India. According to the appellants, these activities were not to be classified as “Business Auxiliary Services” and, therefore, these were not to be taxed as ‘BAS’. It is pointed out that the taxable services of “Support Services of Business or Commerce” were introduced for the levy of service tax with effect from 01.05.2006 only vide Section 65 (104c). On the other hand, learned Commissioner upholding the Revenue’s view has taken a stand that the above services were rightly classifiable under the ‘BAS’ category under Section 65(19) and accordingly the entire demand has been confirmed against the parties. The Commissioner appears to have relied on a circular of the Board to take the view that the appellants are also liable to pay service tax on the services received by them from abroad (reverse charge mechanism) for the material periods on account of alleged retrospective operation of Section 66A of the Finance Act, 1994. As against this demand, it is the case of the appellants, reiterated by their counsel, that Section 66A which was enacted on 18.04.2006 had no retrospective effect as held by this Tribunal in the case of Foster Wheeler Energy Ltd. v. Commissioner of Central Excise & Customs 2007 (7) S.T.R 443 (Tri.-Ahmd). Nevertheless, in respect of M/s. Fifth Avenue, learned Counsel has, for the present, submitted that they are not averse to depositing on amount of service tax of Rs. 1,10,361/-, which is for the period from 01.05.2006. Insofar as the other party is concerned, the entire period of dispute is prior to the date on which the taxable service was introduced and, therefore, in their case, learned Counsel has insisted on full waiver of predeposit and stay of recovery. We have also considered the submissions of learned SDR who has reiterated some of the findings of the Commissioner.
3. Learned Counsel has, in his rejoinder, pointed out that M/s. Fifth Avenue Wind Mill Pvt. Ltd. paid an amount of Rs. 2,82,046/- towards the demand of over Rs. 32 lakhs for the period 19.04.2006 to 30.09.2006. It is submitted that this payment was not taken note of by the Commissioner. Learned Counsel has placed on record a copy of the relevant TR-6 challan evidencing the above payment.
4. After considering the submissions, we have found prima facie case for the appellants insofar as the challenge against demand of service tax in the category of ‘BAS’ for the period prior to 01.05.2006 is concerned. When Clause (104c) was inserted under Section 65 of the Finance Act, 1994, no amendment whatsoever was made to the pre-existing entry viz. Clause (19). On a comparison of the services specified under Clause (104c) with the services found to have been rendered by the appellants, we have come across many elements in common. It appears that most of the services rendered by the appellants are the same as those specified under Section 65 (104c). If that be the case, there is substance in the submission of the appellants that, for any period prior to 01.05.2006, they are not liable to pay service tax on the services rendered by them, in the category of “Business Auxiliary Service”. It is submitted that the same service cannot get classified under two different entries under Section 65. The services specified under Clause (104c) can hardly be classified under Clause (19), the pre-existing entry inasmuch as, when Clause (104c) was inserted, no amendment was made to Clause (19). We have held to this effect in very many cases. Therefore, against the payment of service tax in the category of ‘BAS’, the appellants have made out prima facie case. As against the rest of the demands also, barring the demand of service tax of Rs. 1,10,361/-, the appellants seem to have a good case. We have also noted a payment already made by M/s. Fifth Avenue Wind Mill Pvt. Ltd. for the period subsequent to April-September, 2006.
5. In the result, waiver of predeposit and stay of recovery are allowed to M/s. Fifth Avenue except in respect of an amount of Rs. 1,10,361/-. Full waiver of predeposit and stay of recovery are allowed in respect of the other party. M/s. Fifth Avenue shall report compliance on 21.04.2008.
(Dictated and pronounced in open court)