2014 (11) TMI 1072 - AT - Service Tax

Waiver of pre-deposit - Construction of Tamil Nadu Police Housing Corporation Ltd., Tsunami District Implementation Unit (TDIU), Peoples Development Association (PDA), Madurai Municipal Corporation and M/s.Harley Ram Nursing Home - Held that - it is found that the Tribunal consistently granted stay in respect of demand of tax on the construction of houses by Tamil Nadu Police Housing Corporation Ltd. It is also found that the applicant had not produced any evidence in support of laying of roads for Madurai Municipal Corporation. It is also noted that the Tribunal in the case of construction of Tsunami project directed predeposit partly. It is further noted that construction of M/s. Harley Ram Nursing Home is a private entrepreneur which cannot be treated non-commercial construction. On a query from the Bench, the applicant failed to furnish break-up of the demand. On the other hand, Revenue on the basis of annexure to the show cause notice submitted that the demand of tax in respect of Tamil Nadu Police Housing Corporation Ltd. would be about ₹ 73 lakhs. Hence, the applicant is directed to make a predeposit of ₹ 12,00,000/- (Rupees twelve lakhs only) within 8 weeks. Upon deposit of the said amount, predeposit of balance amount of tax along with interest and penalty would be waived and recovery thereof stayed till disposal of the appeal.

Summary

Issues Involved:
Demand of service tax on various construction services
Sustainability of service tax demand on specific projects
Exemption for laying of roads for Madurai Municipal Corporation
Tax levy on construction of houses for Tsunami affected people
Classification of construction of nursing home
Predeposit requirement for appeal

Analysis:

1. Demand of service tax on various construction services: The applicants were engaged in rendering services under the categories of "Commercial or Industrial Construction Service" and "Construction of Residential Complex Service." The adjudicating authority confirmed a demand of tax along with interest and penalty on specific projects, including Tamil Nadu Police Housing Corporation Ltd., Tsunami District Implementation Unit (TDIU), Peoples Development Association (PDA), Madurai Municipal Corporation, and M/s. Harley Ram Nursing Home.

2. Sustainability of service tax demand on specific projects: The applicant's advocate argued that the demand of service tax on the construction of Tamil Nadu Police Housing Corporation Ltd. was not sustainable due to Tribunal stay orders. Additionally, for projects like Madurai Municipal Corporation and TDIU, the advocate claimed exemptions based on the nature of services provided and beneficiaries of the construction.

3. Exemption for laying of roads for Madurai Municipal Corporation: The applicant contended that the laying of roads for Madurai Municipal Corporation should be exempted from service tax as it falls under the definition of construction service. However, the AR argued that the applicant failed to provide supporting documents for this claim.

4. Tax levy on construction of houses for Tsunami affected people: The advocate highlighted that the houses constructed for Tsunami affected people were distributed free of cost by the government, and therefore, no tax should be levied on this service. The AR, on the other hand, referred to past Tribunal decisions regarding predeposit requirements for similar projects.

5. Classification of construction of nursing home: The AR argued that the nursing home was used for commercial purposes, making it subject to tax. The Tribunal noted that the construction of M/s. Harley Ram Nursing Home, being a private enterprise, falls under commercial construction, and the applicant failed to provide a breakdown of the tax demand.

6. Predeposit requirement for appeal: After considering submissions from both sides and reviewing the records, the Tribunal directed the applicant to make a predeposit of a specific amount within a set timeframe. Upon compliance, the predeposit of the balance tax amount, along with interest and penalty, would be waived until the appeal's disposal.

7. Procedural compliance: The AR pointed out a procedural error in the appeal filing under the Central Excise Act instead of the Finance Act, 1994. The advocate was instructed to correct this discrepancy within a specified period.

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