2011 (3) TMI 183 - AT - Service Tax

Waiver of pre-deposit - Site formation, clearance and excavation service - Notification No. 12/2003-ST, dated 20.6.2003 - Rule 3 of Service Tax (Determination of Value) Rules, 2006 - the assessee s claim is that it does not have details of free supply items provided by SCCL - The Commissioner had confirmed the demand on the entire amount of Rs. 7,52,33,483 and had also denied the cum-tax benefit - the prima facie view that the applicant has not made a strong case for complete waiver of dues confirmed against it for the period 18.4.2006 to 6.2009 - Accordingly ordered to deposit an amount of Rs. 10,00,00,000 (Rupees Ten crores only) within a period of six weeks from the date of receipt of this order and report compliance before Assistant Registrar of this Bench on 10.6.2011 - On reporting such compliance, there shall be waiver of predeposit of balance dues as per the impugned orders and stay of recovery of the same pending decision in the appeals

Issues Involved:
1. Waiver of pre-deposit and stay of recovery of service tax dues.
2. Inclusion of the value of materials (diesel and explosives) supplied free of cost in the taxable value.
3. Applicability of Notification No. 12/2003-ST regarding exemption from service tax on the value of goods and materials.
4. Inclusion of bonus amounts received in the taxable value.
5. Invocation of the extended period for raising the demand.
6. Consideration of undue hardship and safeguarding revenue interests in granting stay.

Detailed Analysis:

1. Waiver of Pre-deposit and Stay of Recovery:
The appellants, M/s VPR Mining Infrastructure Pvt. Ltd., sought waiver of pre-deposit and stay of recovery of service tax dues confirmed against them. The Tribunal considered the applications, case records, and submissions from both sides to decide whether the appellants had made a strong case for complete waiver of dues.

2. Inclusion of the Value of Materials Supplied Free of Cost:
The appellants argued that the value of materials (diesel and explosives) supplied free of cost by the service recipient, SCCL, should not be included in the taxable value. They relied on Notification No. 12/2003-ST, which exempts the value of goods and materials sold by the service provider from service tax. The Tribunal noted that the Commissioner had rightly relied on Section 67 of the Finance Act and the Service Tax (Determination of Value) Rules, 2006, which provide for the inclusion of both monetary and non-monetary consideration in the taxable value. The Tribunal observed that free supply items constitute additional consideration received by the service provider and should be included in the taxable value.

3. Applicability of Notification No. 12/2003-ST:
The appellants claimed exemption under Notification No. 12/2003-ST, arguing that the value of materials supplied free of cost should not be included in the taxable value. The Tribunal noted that the exemption is subject to the condition that such materials are sold by the service provider to the recipient of the service. As the appellants did not sell the materials to SCCL, they did not qualify for the exemption under the said Notification.

4. Inclusion of Bonus Amounts Received:
The appellants contested the inclusion of bonus amounts received from SCCL in the taxable value. They argued that they had paid service tax on the bonus amounts and that the Commissioner had ignored penalties recovered by SCCL. The Tribunal noted that the merits of these submissions needed to be examined and that the appellants had not substantiated their claims before the Commissioner.

5. Invocation of the Extended Period:
The appellants argued that there was no suppression on their part justifying the invocation of the extended period for raising the demand. The Tribunal noted that the Commissioner had invoked the extended period based on the facts and circumstances of the case.

6. Consideration of Undue Hardship and Safeguarding Revenue Interests:
The Tribunal referred to the judgment of the High Court of Andhra Pradesh in the case of CCE, Guntur v. Sri Chaitanya Educational Committee, which laid down principles for considering applications for stay or dispensing with pre-deposit. The Tribunal noted that it must consider prima facie case, balance of convenience, and irreparable loss, and impose conditions to safeguard revenue interests.

Conclusion:
The Tribunal concluded that the appellants had not made a strong case for complete waiver of dues for the period 18.4.2006 to 6.2009. It ordered the appellants to deposit Rs. 10,00,00,000 within six weeks and report compliance. Upon compliance, the Tribunal granted waiver of the balance dues and stay of recovery pending the decision in the appeals.

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