2011 (2) TMI 499 - AT - Service Tax

Waiver of pre-deposit - whether construction of residential flats of NTPC are covered under residential or not - held that - prima facie, we find that the applicants are having a good case in their favour - predeposit waived on this account. Demand of service tax on works contract - Assessee contended that the works contract services have come into effect from 1.6.2007. - We are not convinced with this argument as the applicants are registered under the construction services and paying service tax prior to 1.6.2007. - 50% of demand to be deposited.

Summary

Issues:
1. Waiver of pre-deposit of service tax, interest, and penalties.
2. Service tax demand for construction of residential flats of NTPC.
3. Jurisdictional issue regarding construction services provided in Himachal Pradesh and Punjab.
4. Liability admission and pre-deposit requirement.

Analysis:

Issue 1: Waiver of pre-deposit of service tax, interest, and penalties.
The Applicants sought waiver of pre-deposit of service tax, interest, and penalties amounting to Rs.84,37,992. The Tribunal considered the arguments presented by both sides and decided to waive the service tax demand of Rs.17,82,062 related to the construction of residential flats of NTPC. The waiver was granted pending the appeal process.

Issue 2: Service tax demand for construction of residential flats of NTPC.
The Tribunal found in favor of the Applicants regarding the construction of residential flats of NTPC, stating that they had a strong case. Consequently, the service tax demand of Rs.17,82,062 on this account was waived and stayed during the appeal.

Issue 3: Jurisdictional issue regarding construction services provided in Himachal Pradesh and Punjab.
Regarding the jurisdictional issue, the Tribunal was not convinced by the arguments presented by the Applicants' advocate. The Tribunal noted that the Applicants were not registered under the Commissioner who had jurisdiction over the construction services provided in Himachal Pradesh and Punjab. The Tribunal directed the Applicants to pre-deposit 50% of the total demand after abatement, which amounted to around Rs.20.31 lakhs.

Issue 4: Liability admission and pre-deposit requirement.
The Applicants admitted their liability of Rs.5,63,462, out of which Rs.4,28,459 had already been paid during adjudication. The Tribunal directed the Applicants to pre-deposit the remaining admitted liability of Rs.1,33,007 within eight weeks. Upon compliance with the pre-deposit requirements, the balance amount of service tax, interest, and penalties would be waived, and the recovery stayed during the appeal process.

In conclusion, the Tribunal granted partial waiver of the service tax demand, stayed recovery during the appeal process, and imposed pre-deposit requirements based on the issues of construction of residential flats of NTPC, jurisdictional concerns, and admission of liability by the Applicants. Compliance with the pre-deposit conditions was set as a prerequisite for the balance amount waiver and stay of recovery.