2010 (9) TMI 631 - AT - Service Tax

Waiver of pre-deposit - commercial or industrial construction service - appellant is willing to pay an amount of Rs. 15 lakhs on account of the fact that there was a calculation mistake on their part in determining the amount of service tax to be paid on their output service - Appellant has not availed credit on input service in respect of certain projects or during certain calendar months, but this fact was not taken into account by the adjudicating authority while computing the demand of service tax for the entire period - Notification No. 1/2006-S.T., dated 1-3-2006 - Accordingly, a provider of this service may pay service tax to the extent of 33% of the gross taxable value subject to condition that no CENVAT credit shall be taken on inputs, capital goods or input service - In the result, the appellant shall deposit an amount of Rs. 97 lakhs within a period of 4 weeks

Summary

Issues:
- Waiver of pre-deposit and stay of recovery sought by the appellant in relation to service tax demand and penalty imposed by the Commissioner.
- Calculation mistake by the appellant in determining the service tax amount to be paid on their output service.
- Applicability of Notification No. 1/2006-S.T., dated 1-3-2006, granting partial exemption from service tax for commercial or industrial construction service.
- Interpretation of the condition regarding CENVAT credit on input service under the Notification.
- Direction for the appellant to deposit a specific amount within a specified period.

Analysis:
- The appellant sought waiver of pre-deposit and stay of recovery for service tax of over Rs. 2.49 crores demanded by the Commissioner, along with the penalty imposed under Sec. 76 of the Finance Act, 1994. After examining the records and hearing both sides, it was noted that the appellant acknowledged a calculation mistake in determining the service tax amount, leading them to offer to pay Rs. 15 lakhs. The appellant estimated the demand of service tax at over Rs. 1.45 crores in Annexure-10 to the memo of appeal, which was based on the projects and periods where they claimed no credit on input services was availed.

- The appellant's argument was related to the non-consideration of the fact that they did not avail credit on input services for certain projects or calendar months by the adjudicating authority while calculating the service tax demand. The ld. counsel highlighted that no credit of input service was taken in April and June 2006, suggesting that the amounts mentioned against these months in Annexure-10 should be deducted. The Tribunal considered the applicability of Notification No. 1/2006-S.T., dated 1-3-2006, which provided partial exemption from service tax for commercial or industrial construction service, subject to conditions regarding CENVAT credit.

- The ld. Counsel attempted to interpret the condition under the Notification to claim that CENVAT credit on input service could be taken if the service was rendered before 1-3-2006. However, the Tribunal did not favor this interpretation. Ultimately, the Tribunal directed the appellant to deposit Rs. 97 lakhs within four weeks, without considering any plea of financial hardships in the application. The decision was made based on the admitted liability of the appellant, emphasizing compliance by a specified date.

This detailed analysis of the judgment highlights the issues raised by the appellant, the examination of records, the calculation mistake, the interpretation of relevant notifications, and the final direction given by the Tribunal regarding the deposit amount and compliance deadline.