Balance of convenience held in favor of Revenue in service tax matter.

1. The appellant M/s Shoppers Stop Ltd., Malad West, Mumbai, (SSL in short) are in the business of operating and running retail stores where goods of various brands, varieties, description, etc. are sold under one roof.

2. They grant concession to various concessionaires for the display, demonstration and sale of the products from the retail stores operated by SSL. The consideration for the concession is received as a percentage of the value of the goods sold subject to a minimum amount.

3. The appellant did not discharge any service tax on a consideration of Rs. 27,86,81,505/- received during 1.5.06 to 31.05.07. The department was of the view that the said service rendered by M/s SSL falls within the category of „Business Support Services? (BSS in short) and accordingly, a show cause notice dated 22.10.2009 was issued, to the appellant demanding service tax of Rs. 3,44,45,034/- along with interest thereon and also proposing to impose penalties under the provisions of Finance act, 1994.

4. The notice was adjudicated and the service rendered was classified under BSS and the service tax demand was confirmed along with interest thereon and penalties were also imposed.

Tribunal Held as under,

5. Though as per the agreement, the concessionaire has to insure the goods kept for display and sale on their own account and has to design/decorate the display counters and should pay for their own telephone connections, the concessionaires use the Retail Store facility of the appellant which includes a host a common facilities such as air – conditioned and well – lit atmosphere, security and insurance for the entire building, common facility for the customers who are visiting the retail mall such as drinking water, toilet, lift / escalator facility for easy movement, common billing and collection facilities in respect of the goods sold, and so on.

6. Customers visit a retail man because of the variety of goods offered for sale of reputed brands under one roof, the comfortable atmosphere for shopping, facility for small children by way of play area, etc. who accompany the parents, facility for food / beverages etc. by way of food courts and so on. There is no denial of the fact it is because of these facilities, customers are attracted to Retail Malls. All these come under the category of infrastructural facilities. As per section 65 (104c) of the Finance Act, 1994, “support services for business or commerce” means services provided in relation to business or ommerce and includes evaluation of prospective customers, telemarketing, processing of purchase orders and fulfillment services, information and tracking of delivery schedules, managing distribution and logistics, customer relationship[ management services, accounting and processing of transactions, operational assistance for marketing, formulation of customer service and pricing policies, infrastructural support services and other transaction processing. “As per Explanation, “infrastructural support services” includes providing office space along with office utilities, reception with competent personnel to handle messages, secretarial services, internet and telecom facilities, pantry and security.

7. Thus the service provided by the appellant prima facie come under the category of BSS as the appellant seems to provide both infrastructural support services and accounting and processing of transactions.

8. As regards the time bar issue raised by the appellant, it is a question of both fact and law and can be gone into in detail at the time of final hearing. In any case, it is not the case of the appellant that they had disclosed the facts relating to their activities to the department on their own. From the facts available on record it is seen that the matter came to light only when the department started investigation into the activities of the appellant. Therefore, it cannot be concluded at this stage that there was no suppression of facts on the part of the appellant.

9. The appellant has not pleaded any financial hardship. As per the decision of the Hon?ble High Court of Andhra Pradesh in the case of SQL Star International Ltd. – 2012 (25) STR 113 (AP) prima facie case, balance of convenience and irreparable loss of Revenue have to be taken into account while considering grant of interim stay.

10. From the foregoing discussion, we have come to the preliminary conclusion that there is no prima facie case in favour of the appellant and there is no financial hardship pleaded. Therefore, the balance of convenience lies in favour of Revenue.

11. Accordingly we direct the appellant to make a pre – deposit of 50% of the service tax demand confirmed against the appellant within a period of eight weeks and report compliance on 22nd May 2013. On such compliance, pre – deposit of balance of dues adjudged against the appellant shall stand waived and recovery thereof stayed during the pendency of the appeal.