2011 (3) TMI 282 - AT - Service Tax

Waiver of pre-deposit - Demand - Commercial or Industrial construction service - Valuation - It is said that service tax was paid on the service component and sale tax on the sale component. This argument of the assessee may be good for the period from 1-6-2007 when the works contract concept made its way into the domain of service tax for the first time - prima facie view that there is merit in the department s contention that the services provided by the appellant were taxable even during the period prior to 1.6.2007 on which admittedly, no Service Tax has been paid as such - Decided against the assessee

Summary

Issues Involved:
1. Waiver of pre-deposit requirement.
2. Taxability of services provided before 1-6-2007.
3. Classification of services under different taxable categories.
4. Financial hardship and interest of revenue.

Issue-wise Detailed Analysis:

1. Waiver of Pre-deposit Requirement:
The appellant sought waiver from the requirement of pre-deposit of the service tax demand of Rs. 1,18,06,878, along with interest and penalties under sections 77 and 78 of the Finance Act, 1994. The Tribunal considered whether the appellant had a prima facie case and the twin considerations of undue hardship and the interests of revenue.

2. Taxability of Services Provided Before 1-6-2007:
The appellant argued that services like "commercial or industrial construction" and "construction of complex" involving transfer of property in goods, on which Sales Tax/VAT had been paid, were not taxable before 1-6-2007. They contended that these services became taxable as 'works contract service' under section 65(105)(zzzza) only from 1-6-2007. The Department, however, maintained that these services were taxable under sections 65(105)(zzq) and 65(105)(zzh) even before 1-6-2007. The Tribunal agreed with the Department, referencing the case of Sunil Hi-tech Engineers Ltd. v. Commissioner of Central Excise, which held that the introduction of 'Works Contract Service' on 1-6-2007 did not render the services non-taxable prior to this date.

3. Classification of Services Under Different Taxable Categories:
The appellant provided services to various clients, including public sector undertakings and argued that certain constructions, such as buildings for HAL and BSNL, were not commercial complexes and hence not taxable. The Tribunal rejected this contention, noting that public sector undertakings like BSNL and HAL are commercial entities. The Tribunal also discussed definitions and scope of terms like "commercial or industrial construction service," "construction of complex service," and "works contract service" to clarify the taxability of the services provided.

4. Financial Hardship and Interest of Revenue:
The Tribunal assessed the appellant's plea of financial hardship and balanced it against the interest of revenue. They directed the appellant to deposit Rs. 60,00,000 within eight weeks, in addition to the Rs. 18,46,970 already paid, for the waiver of the remaining amount. This decision was guided by considerations highlighted in cases like Benara Valves Ltd. v. CCE and Indo Nissan Oxo Chemicals Industries Ltd.

Conclusion:
The Tribunal concluded that the appellant did not establish a prima facie case for a total waiver of pre-deposit. They directed a partial pre-deposit considering both financial hardship and revenue interests. The detailed issues and arguments were to be examined during the regular hearing. The order was pronounced in open court on 29.03.2011.