2009 (8) TMI 735 - AT - Service Tax

Waiver of pre-deposit works contract service composition scheme - came into force on 1-6-07 to levy Service tax by a composite rate - appellant opted for scheme on 21-6-07 - authorities have made case against the appellant because composition scheme whether opted was not stated in the course of investigation for which the appellant is not entitled to the composition scheme Held that - is no embargo in the law that an option cannot be exercised - appellant has not deposited the demand for the period from April 06 to Sept. 07 which is significant amount - direct the appellant to make pre-deposit of Rs. 5 lakhs - On deposit of such amount, pre-deposit of balance demand shall be waived during pendency of the appeal

Summary

Issues:
1. Challenge to adjudication order for works contract executed during pre-composition and post-composition periods.
2. Validity of composition scheme opted by the appellant.
3. Dispute regarding demands for specific periods.
4. Department's objection to appellant's entitlement to composition scheme.
5. Requirement for pre-deposit during appeal.

Analysis:

1. Challenge to Adjudication Order:
The authorized representative of the appellant contested the adjudication order, arguing that it was unreasonable. The period under appeal ranged from June 2005 to March 2007, with specific demands for different sub-periods. While there was no demand for the initial period, demands of Rs. 79,016/-, Rs. 6,43,926/-, and Rs. 36,956/- were raised for subsequent periods. Additionally, a demand of Rs. 15,34,770/- for the post-composition scheme period was also in dispute, resulting in an aggregate service tax demand of Rs. 22,36,276/-.

2. Validity of Composition Scheme:
The appellant opted for the composition scheme when it came into force on June 1, 2007, and the Department did not object to this choice. The authorized representative argued that this option remained valid under the law, despite the authorities raising concerns about the appellant's eligibility due to non-disclosure during investigation. To mitigate the dispute, the appellant had already made a deposit of Rs. 3,64,089/- during the adjudication process, requesting a waiver of pre-deposit for the appeal's duration.

3. Dispute Regarding Demands:
The Department contested the appellant's entitlement to the composition formula, stating that the entire work was subject to the normal scheme of the law. After hearing both sides and examining the records, the Tribunal acknowledged that the appellant could be governed by the composition scheme post-June 1, 2007, based on the exercised option. The appellant's deposit of Rs. 3,64,089/- was noted, along with the significant outstanding demand for the period from April 2006 to September 2007. As an interim measure to safeguard the Revenue's interests, the Tribunal directed the appellant to make a pre-deposit of Rs. 5 lakhs within four weeks, with the balance demand's pre-deposit waived during the appeal's pendency.

This detailed analysis highlights the key issues addressed in the judgment, including challenges to the adjudication order, the validity of the composition scheme, disputes over specific demands, objections raised by the Department, and the requirement for pre-deposit during the appeal process.