2010 (12) TMI 805 - AT - Service Tax

Waiver of pre-deposit - The demand under challenge is in relation to maintenance or repair service rendered by the appellant through a contractor to the State Government. Transformers belonging to the State Government were repaired in the said manner during the period of dispute - The appellant has taken a feeble contention to the effect that the repairs undertaken by them through contractor cannot be exigible to levy of service tax - After considering the definition of the service as amended from time to time, have not been able to accept the contention of the assessee - Decided against the assessee.

Summary

Issues:
1. Waiver of pre-deposit and stay of recovery in respect of service tax, education cess, and penalties.
2. Time-bar plea against the demand of service tax and cess.
3. Prima facie case for the appellant regarding maintenance or repair service.
4. Reduction of the amount to be pre-deposited by the party.

Analysis:
1. The appellant sought waiver of pre-deposit and stay of recovery for service tax, education cess, and penalties imposed by the original authority. The appellate authority directed the appellant to pre-deposit an amount of Rs. 1.25 lakhs, of which only Rs. 50,000 was deposited. The balance amount of Rs. 75,000 was not deposited, leading to the dismissal of the appeal. The appellant raised a time-bar plea against the demand, stating that the show-cause notice issued two years after an audit conducted in 2006 made the demand time-barred.

2. The learned DR contested the time-bar plea, citing a Gujarat High Court decision that held the knowledge of the department as irrelevant in invoking the extended period of limitation. The department's information gathered through audit was deemed irrelevant in this case. The Tribunal found substance in this argument, rejecting the appellant's time-bar plea.

3. On the merits of the case, the Tribunal did not find a prima facie case for the appellant regarding the maintenance or repair service provided to the State Government. The demand was related to repair services rendered through a contractor to the State Government for transformers. The appellant's contention that the repairs undertaken through a contractor were not liable for service tax was not accepted. The Tribunal reduced the amount to be pre-deposited by the party marginally to Rs. 50,000 considering the appellant's business losses. The appellant was given 30 days to deposit this amount for the appeal to be heard on merits.

4. The Tribunal allowed the appeal by way of remand, directing the lower appellate authority to dispose of the appeal on merits after the party deposits the reduced amount within the specified timeframe. The stay application was also disposed of in favor of the appellant.