2015 (2) TMI 1188 - HC - Service Tax

Waiver of pre-condition - deposition of 60 lakhs for hearing the appeal - appellant is a service provider in construction contracts - in respect of contracts in question only 20% of the value of construction contracts denoted the service components - Held that - the Court is of the opinion that prima facie the appellant s submission that 20% of the gross receipts of the work orders relates to service components is the subject matter of the merits of the appeal. In these circumstances the direction to deposit 60 lakhs based on the adjudication order that abatement of 67% of the amount under the Notification No. 1/2006-S.T. was not available itself requires to be gone into. In these circumstances the direction to pay 60 lakhs with proportionate interest is hereby modified; instead the appellant shall deposit 20 lakhs as a pre-condition for hearing of its appeal. The said amounts shall be paid within six weeks from today. - Decided partly in favour of appellant

Summary

Issues involved:
1. Appeal against an order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) regarding the deposit amount required for hearing the appeal.
2. Contention regarding the proportion of service components in construction contracts for the period April 2007 to March 2009.
3. Interpretation of Notification No. 1/2006-S.T. and Notification No. 12/2003.
4. Assessment of the appellant's claim and the justification for the recovery of amounts by the respondent.
5. Modification of the direction to deposit Rs. 60 lakhs as a pre-condition for hearing the appeal.

Detailed Analysis:

1. The appeal was filed against an order of the CESTAT requiring the appellant to deposit Rs. 60 lakhs with proportionate interest as a pre-condition for hearing the appeal. The appellant argued that this direction prejudiced them greatly.

2. The appellant, a service provider in construction contracts, contended that only 20% of the value of the construction contracts represented the service components for the period April 2007 to March 2009. They claimed that the amounts deposited exceeded this proportion, amounting to almost 33% of the total contract value. The appellant relied on a previous decision while dealing with Notification No. 1/2006-S.T.

3. The respondent argued that the appellant's claim was not in accordance with the mandate under Notification No. 12/2003, justifying their action to recover the amounts.

4. The appeal arose from an order of the adjudicating officer following a show cause notice, resulting in the direction to deposit Rs. 60 lakhs.

5. The Court considered the circumstances and found that the appellant's submission regarding the proportion of service components in the work orders was a matter for the merits of the appeal. The direction to deposit Rs. 60 lakhs based on the adjudication order needed further examination. Consequently, the Court modified the requirement, reducing the pre-condition amount to Rs. 20 lakhs to be deposited within six weeks.

6. The Court answered the legal question accordingly, and the appeal was partly allowed, modifying the deposit amount condition for hearing the appeal.