2010 (4) TMI 645 - AT - Service Tax

Waiver of pre-deposit - demand of service tax site formation service demand assailed on the ground that contract is covered under mining service - mining service comes under the service tax w.e.f. 1-6-2007 and the present demand is prior to 1-6-2007 Held that - contract is for removal of overburden, prima facie no merit in the contention that contract is for mining of ore - not a fit case for total waiver of pre-deposit - applicants are directed to deposit an amount of Rs. 2.00 Crores - remaining amounts of service tax, interest and penalties are waived

Summary

Issues: Jurisdiction of Commissioner, Service Tax demand prior to 1-6-2007, Financial hardship due to pre-deposit.

Jurisdiction of Commissioner:
The appellants argued that the adjudication order was passed by the Commissioner, Kolkata, who lacked jurisdiction as the services were provided outside the Commissioner's jurisdiction. However, the Revenue contended that since the Head Office of the appellants, where orders were placed and bills raised, was in Kolkata, the Commissioner of Service Tax in Kolkata had jurisdiction. The Revenue also cited a Tribunal decision in the Nokia case to support their stance. Ultimately, the Tribunal found merit in the appellants' argument regarding jurisdiction due to the location of the Head Office in Kolkata.

Service Tax Demand Prior to 1-6-2007:
The demand for service tax of over Rs. 6 crores was based on three agreements, with a significant portion relating to an agreement with M/s. Uranium Corporation of India Ltd. dated 1st June, 2005, for removal of overburden and incidental ore. The appellants contended that since the mining service was taxable only from 1-6-2007, the demand before this date was not sustainable. However, the Tribunal, after examining the contract details, found that the contract was primarily for site formation and clearance, not mining of ore, as per the Finance Act, 2005. Consequently, the Tribunal ruled that the demand was justified, leading to a partial waiver of the pre-deposit amount.

Financial Hardship due to Pre-deposit:
The appellants also raised concerns about financial hardship if required to pre-deposit the substantial amount demanded. They argued that such a pre-deposit would cause undue hardship. In response, the Tribunal directed the appellants to deposit a reduced amount of Rs. 2 crores within eight weeks, granting a waiver on the remaining pre-deposit amount, including service tax, interest, and penalties, during the appeal's pendency. The compliance reporting was scheduled for 26th July, 2010, following this decision.