2009 (5) TMI 804 - AT - Service Tax

Summary

Issues involved: Determination of tax liability u/s Finance Act, 1994 on interior decoration services provided under a contract; eligibility for abatement of 67% on Service Tax; applicability of Notification No. 18/2005-S.T., dated 7-6-2005; requirement of documentary evidence for claiming benefit under Notification No. 12/2003-S.T., dated 20-6-2003.

Summary:

Issue 1: Tax liability on interior decoration services
The Appellant, engaged in interior decoration services on a contract basis, claimed that only the service component should be taxable u/s Finance Act, 1994, not the materials used. The Revenue contended that the Appellant's contracts included material costs, hence disentitling them from the abatement of 67% under relevant Notifications.

Issue 2: Abatement of 67% on Service Tax
The Appellant argued for the abatement of 67% on the gross value of the contract received, citing payment of Service Tax under the rate applicable to Commercial and Industrial Construction Service. The Tribunal noted the Appellant's deposit of Rs. 2.67 crores and the claim for pending appeal recovery suspension.

Issue 3: Applicability of Notification No. 18/2005-S.T., dated 7-6-2005
The Revenue contended that the Appellant, claiming work completion and finishing, could not avail benefits under this Notification as it did not exclude works involving materials. The Tribunal observed that the Appellant failed to demonstrate that the completion and finishing activities did not involve materials, as required by the Notification.

Issue 4: Requirement of documentary evidence under Notification No. 12/2003-S.T., dated 20-6-2003
The Revenue argued that the Appellant needed to provide documentary evidence specifying the value of goods and materials in the works contract to claim benefits under this Notification.

Conclusion:
After hearing both parties extensively, the Tribunal found that the Appellant did not sufficiently establish that the completion and finishing activities were devoid of material involvement. As a result, an interim measure was directed for the Appellant to deposit Rs. 2 crores to protect the Revenue's interests. This pre-deposit was deemed necessary due to the wilful suppression of facts and pending tax liabilities. The Tribunal emphasized the conditional right to hear the appeal and directed compliance within a specified timeframe to stay the realization of the balance demand during the appeal's pendency.