2011 (8) TMI 959 - AT - Service Tax

Stay - Demand and Penalty - service tax of Rs.21,93,683/- stands confirmed and penalty of equivalent amount against the applicants on the ground that during the period from 1.7.2003 to 31.3.2007, they have provided the services of erection, installation and commissioning to M/s.BSNL and have not paid any service tax on the same. As per the appellants, the services provided by them were civil works i.e. preparation of base, digging/constructing foundation for erection of towers and no services of erection, installation and commissioning were involved - The demand also stands agitated on the point of time bar inasmuch as the show cause notice for the relevant period was issued on 28.4.2008 - including the aspect of time bar and poor financial condition of the appellants, we direct the applicants/appellants to deposit 15% of service tax within eight weeks and report compliance to the Commissioner (Appeals) - The Commissioner (Appeals) after ascertaining the compliance with the above order shall decide the appeals on merits.

Issues:
1. Non-compliance with stay order directing deposit of service tax and penalty.
2. Lack of personal hearing before passing stay orders.
3. Dispute regarding nature of services provided and time bar for issuing show cause notice.
4. Harshness of direction to deposit 25% of confirmed amount due to poor financial condition.
5. Modification of deposit amount and further proceedings.

Analysis:
1. The judgment addresses the issue of non-compliance with the stay order issued by the appellate authority, directing the appellants to deposit 25% of the entire amount of service tax confirmed and penalty imposed. The Commissioner (Appeals) dismissed the appeal due to this non-compliance. The Tribunal noted that the stay orders were passed without a personal hearing, leading the appellants to move a modification application, which was subsequently rejected. The Tribunal considered this non-compliance and the subsequent actions in its decision.

2. The Tribunal delved into the issue of lack of personal hearing before the stay orders were passed by the Commissioner (Appeals). It was highlighted that after the appellants moved a modification application and were heard in person, the Commissioner (Appeals) rejected the modification application and the appeal for non-compliance. This procedural aspect was crucial in the Tribunal's analysis of the case.

3. A significant part of the judgment revolved around the dispute regarding the nature of services provided by the appellants. The service tax and penalty were confirmed against the appellants for services related to erection, installation, and commissioning provided to a specific entity. The appellants argued that the services were limited to civil works and did not involve the mentioned activities. Moreover, they contested the time bar issue concerning the issuance of the show cause notice. These contentions were thoroughly examined by the Tribunal in reaching its decision.

4. The Tribunal considered the harshness of the direction to deposit 25% of the confirmed amount, especially in light of the appellants' poor financial condition. After hearing arguments from both sides and evaluating the overall circumstances, including the time bar aspect, the Tribunal directed the appellants to deposit a reduced amount of 15% of the service tax within a specified timeframe. This adjustment took into account the financial constraints faced by the appellants.

5. Lastly, the judgment concluded by addressing the modification of the deposit amount and outlining the further proceedings. The Tribunal directed the appellants to comply with the revised deposit requirement and report back to the Commissioner (Appeals). It was decided that the appeals would be decided on merits after the compliance verification. This comprehensive analysis and adjustment of the deposit amount aimed to balance the interests of both parties and ensure a fair resolution of the dispute.

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