2011 (5) TMI 459 - AT - Service Tax

Waiver of pre-deposit - Short payment of tax - The issue contended by the Revenue is that M/s Gujarat Engineering Research Institute Vadodara are providing taxable service of technical testing and analysis through its various laboratories and levy of Service Tax w.e.f. 1.7.03 - the appellant contended that this institute is an arm of Government of Gujarat and the activities carried out by them cannot be treated as taxable services - They are not a commercial organization but is a Government organization and its accounts are maintained according to PWD Manuals - prima facie appellants have a strong case on the issue of limitation - This Bench has decided this issue in a similar case of BSNL Vs. CCE Ahmedabad 2008 -TMI - 32888 - CESTAT AHMEDABAD decided in favour of assessee.

Summary

Issues:
Prayer for dispensation of pre-deposit of Service Tax, interest, and penalty under Section 35F of Central Excise Act, 1944 based on the contention that the institute is a government organization and its activities are not taxable services.

Analysis:
The appellant sought relief from the requirement of pre-deposit of Service Tax, interest, and penalty, arguing that the institute, being a State Government department, should not be liable to pay Service Tax as its activities are not commercial but governmental in nature. The Revenue contended that the services provided by M/s Gujarat Engineering Research Institute fall under the category of "Technical Testing and Analysis Service," attracting Service Tax. The appellant emphasized that the institute's operations are in accordance with PWD Manuals and there was no intention to evade taxes, believing they were not liable to pay Service Tax.

Analysis on Limitation Issue:
The Tribunal, without delving into the merits of the case, analyzed the issue of limitation. Citing a previous decision in the case of BSNL Vs. CCE Ahmedabad, where it was held that a PSU of the Government cannot be attributed with mala fide intention to evade payment of duty, the Tribunal found that the appellants have a strong prima facie case on the limitation issue. Relying on the precedent, the Tribunal set aside the impugned order and granted relief to the appellant without going into the merits of the case, based on the principle that there was no intention to evade payment of taxes.

Decision and Relief Granted:
Based on the above analysis and applying the ratio of the previous decision, the Tribunal granted stay and waiver of pre-deposit of demand, interest, and penalty to the appellant. The stay petition was disposed of accordingly, providing relief to the appellant from the pre-deposit requirements.

This judgment highlights the importance of considering the nature of the organization and the absence of mala fide intentions in tax liability cases involving government entities. The Tribunal's decision to grant relief on the limitation issue showcases a fair and just approach in tax matters, ensuring that undue burdens are not imposed when there is no intent to evade taxes.