2011 (3) TMI 671 - AT - Service Tax

Demand - Notification No. 15/2004-S.T. and Notification No. 1/2006-S.T. - In the case of Sobha Developers Ltd. v. Commissioner of Central Excise & Service Tax Bangalore reported in (2009 -TMI - 76097 - CESTAT BANGALORE ) - held that exemption of the material consumed or sold will be available if records there of maintained and it is not necessary to indicate the cost of materials sold in each invoice - Stay granted.

Summary

Issues:
Demand of service tax based on alleged wrongful availing of Notification benefits and short payment. Eligibility for service tax under construction services/commercial or industrial construction services. Denial of benefit under Notification No. 12/2003-S.T. due to lack of documentary proof. Comparison of relevant case laws to support contentions. Decision on pre-deposit requirement based on case analysis.

Analysis:
The judgment dealt with the issue of demand of service tax against the applicants for the period 10-9-2004 to 30-9-2007, based on the allegation of wrongful availing of Notification benefits and short payment. The contention was that the applicants, engaged in completion and finishing services, were not eligible for the benefits claimed. The applicants argued that they were involved in composite work contracts chargeable to service tax only from 1st June 2007 under works contract services, thus not liable for service tax during the impugned period under construction services. They also claimed entitlement to Notification benefits and exemption under Notification No. 12/2003-S.T. for goods and materials sold, despite the lack of specific documentary proof indicating the value of goods and materials in invoices. The Tribunal analyzed the submissions and relevant case laws to make a decision.

The Advocate for the applicants relied on case laws such as Sobha Developers Ltd. and Sky Line Contractors to support the argument that demand of service tax on goods with paid Sales Tax/VAT cannot be sustained. The Tribunal found that the denial of benefit under Notification No. 12/2003-S.T. due to lack of documentary proof was not justified, as exemption for material consumed or sold could be granted without indicating the cost of materials in each invoice, as held in Sobha Developers Ltd. case. The Tribunal noted that the case laws cited by the Revenue were not relevant to the present case, as they involved material supplied free of cost by the service recipient, unlike the situation at hand. Therefore, the Tribunal granted a waiver of pre-deposit for the entire service tax, interest, and penalty levied on the applicants, staying the demand during the appeal process.

In contrast, the ld. DR cited the case of Jaihind Projects Ltd. where the Tribunal decided in favor of the Revenue, suggesting a pre-deposit requirement. However, the Tribunal found that the facts of the present case were distinct from the Jaihind Projects Ltd. case, leading to a different decision regarding the waiver of pre-deposit. The judgment highlighted the importance of maintaining records of material consumed or sold to avail exemptions under relevant Notifications, emphasizing the need for proper documentation to support claims in such cases.

Overall, the judgment analyzed the contentions of both parties, compared relevant case laws, and made a decision in favor of the applicants based on the interpretation of Notification provisions and exemption criteria, ultimately granting a waiver of pre-deposit and staying the demand during the appeal process.