2011 (3) TMI 749 - AT - Service Tax

Waiver of pre-deposit - Application for stay - Works contract - Maintenance or Repair Service - Circular F.No. B. 1/16/2007-TRU, dated 22-5-2007 - held that the appellant therein was eligible for abatement as per Notification No. 15/2004 and 18/2005 to the extent of 67% of taxable value though the assessee had received materials from the service recipient - the demand of Service Tax of Rs. 25,43,551/- and Education Cess of Rs. 50,872/- made by denying the benefit of exemption Notification No. 18/2005-S.T., dated 7-6-2005 and 01/2006-S.T., dated 1-3-2006, as regards the services rendered to M/s. Skyline Projects, is contrary to the ratio of the decisions of the Tribunal and the High Court cited by the appellant - Stay granted.

Summary

Issues:
1. Stay application for waiver of pre-deposit and stay of recovery of dues confirmed by the Commissioner.
2. Classification of services provided by the appellant under different categories for the purpose of Service Tax.
3. Interpretation of the applicability of Service Tax on Works Contracts prior to 1-6-2007.

Analysis:
1. The appellant, a construction company, filed a stay application seeking waiver of pre-deposit and stay of recovery of confirmed dues by the Commissioner. The dues included Service Tax, Education Cess, applicable interest, and penalties under various sections. The Tribunal considered the facts of the case and the submissions made by both parties.

2. The services provided by the appellant were classified under different categories for Service Tax assessment. These included Management, Maintenance or Repair Service; Commercial or Industrial Construction Service provided to various clients; and Construction of Residential Complexes. The Commissioner had confirmed demands under these categories based on the nature of services provided by the appellant.

3. The crux of the issue revolved around the interpretation of the applicability of Service Tax on Works Contracts prior to 1-6-2007. The appellant argued that Works Contracts could not be subjected to Service Tax before this date, citing various judicial authorities and decisions. They relied on judgments that held Works Contracts could not be taxed under a different head before the specified date.

4. The Tribunal analyzed the submissions and legal precedents cited by both parties. They noted that the Commissioner had not rejected the claim that the activities were subjected to Sales Tax under Works Contracts. The Tribunal found merit in the appellant's arguments based on judicial authorities such as the Turbotech case and the Cemex Engineers case. They highlighted decisions that supported the appellant's stance on the non-taxability of Works Contracts under different heads before 1-6-2007.

5. Ultimately, the Tribunal ruled in favor of the appellant, ordering a complete waiver of the confirmed dues and staying the recovery pending the final decision in the appeal. The Tribunal found that the demands made by the Commissioner were against the ratio of certain decisions and authorities cited by the appellant, supporting the view that Works Contracts could not be taxed under another head before the specified date.

In conclusion, the Tribunal's judgment favored the appellant's arguments regarding the applicability of Service Tax on Works Contracts before 1-6-2007, granting a waiver of the confirmed dues and staying the recovery process.