2009 (2) TMI 714 - AT - Service Tax

Summary

Issues:
1. Requirement of pre-deposit under Service Tax and penalties.
2. Liability of Service Tax on construction activity prior to 15-6-2005.
3. Applicability of decision in the case of M/s. Art Leasing Ltd. v. CCE, Cochin.
4. Amount already deposited by the appellants.
5. Waiver of balance amount of duty and penalties till appeal disposal.

Analysis:

Issue 1: Requirement of pre-deposit under Service Tax and penalties
The impugned order mandated the appellant to pre-deposit a sum of Rs. 56,839/- towards Service Tax and penalties of Rs. 1000/- and Rs. 2,29,152/- under Section 77 and 78, respectively.

Issue 2: Liability of Service Tax on construction activity prior to 15-6-2005
The Service Tax was levied on the construction activity, which became liable for tax only from 15-6-2005. The appellant argued that amounts received for contracts entered before this date should not be subject to Service Tax, as the services were not taxable during that period. Reference was made to the decision in M/s. Art Leasing Ltd. v. CCE, Cochin, where it was held that the rate prevailing on the day of the contract is relevant.

Issue 3: Applicability of decision in M/s. Art Leasing Ltd. v. CCE, Cochin
The appellant's advocate contended that the decision in M/s. Art Leasing Ltd. v. CCE, Cochin, supports their case. The bench in that case had considered a similar issue and ruled in favor of the appellant, indicating that the rate at the time of contract is significant.

Issue 4: Amount already deposited by the appellants
It was noted that the appellants had already deposited Rs. 2,00,000/-. This amount was deemed sufficient as a pre-deposit for the appeal hearing, resulting in the waiver of the balance amount of duty and penalties until the appeal is disposed of. No coercive action by the revenue was to be taken even after 180 days.

This judgment highlights the importance of pre-deposit requirements, the timing of Service Tax liability on construction activities, the relevance of past decisions in similar cases, and the impact of already deposited amounts on the waiver of balance dues pending appeal resolution.