2015 (11) TMI 1531 - AT - Service Tax

Waiver of pre-deposit - Valuation - Benefit of 67% abatement was not allowed on the ground that there was some free supply materials - Held that - prima facie case is in favor of assessee - stay granted on this account. As regards the service provided to the so called charitable organization in the form of constructing buildings for Amity School, Amity University and Amity Engineering College at various locations, prima facie, it would fall under the Commercial or Industrial Construction Services because even if these institutions are run by charitable organization, the services rendered through these institutions per se cannot be said to be charitable. - stay granted partially.

Summary

Issues:
1. Denial of benefit of 67% abatement on the ground of non-inclusion of free supply material in the value of taxable service.
2. Determination of whether services rendered to charitable organizations for constructing buildings fall under Commercial or Industrial Construction Services.

Analysis:
1. The appellant contested the denial of the 67% abatement benefit due to the non-inclusion of free supply material in the taxable service value. The Tribunal noted that this issue was resolved in favor of the appellant by a judgment of the Larger Bench in the case of M/s. Bhayana Builders Pvt. Ltd. The Tribunal upheld the appellant's contention regarding the abatement benefit.

2. Regarding the services provided to charitable organizations for constructing buildings like Amity School, Amity University, and Amity Engineering College, the Tribunal analyzed the nature of these services. Despite the institutions being run by charitable organizations, the Tribunal concluded that the services rendered through these institutions could not be deemed charitable per se. The Tribunal found that the construction services would fall under Commercial or Industrial Construction Services category. The appellant estimated the demand related to these constructions to be approximately Rs. 5 crores after applying the 67% abatement.

3. The Tribunal considered the appellant's argument that the demand might be time-barred and required detailed analysis. To meet the statutory pre-deposit requirement, the Tribunal ordered a pre-deposit of Rs. 1,75,00,000 within 8 weeks. Compliance was to be reported by a specified date. Upon compliance, the recovery of the remaining adjudicating liability was stayed during the appeal's pendency. The Tribunal warned that failure to make the pre-deposit would result in the dismissal of the appeal.

4. The matter was scheduled to return for compliance reporting on a specific date. The operative part of the order was pronounced in the open court, outlining the pre-deposit requirement and the stay on recovery pending compliance.