2011 (5) TMI 559 - AT - Service Tax

Waiver of pre-deposit - As regards the demand of Rs.37,43,887/- relates to the amount received prior to 10.9.2004 in respect of services rendered after that day - The appellants are claiming exemption in respect of this amount in terms of Notification 18/2004-S.T. dated 10.9.2004 which held that the service tax is exempted in respect of that portion of the value of taxable services which was received by the service provider prior to 10.9.2004 - Held that - The appellants case prima-facie falls within the ambit of this Notification - Department has argued that since the impugned service has been brought into tax net w.e.f. 10.9.2004, the value of such services received by the service provider is required to be charged to tax and hence he supports the order of the adjudicating Commissioner - Since the tax was levied from the future date, the tax payer could not have anticipated the same and could not have collected the tax amount from his customer when he received the payment for the services in advance prior to imposition of the tax - As such, in respect of the amount of Rs.37,43,887/-, the appellants have made out a prima-facie case in favour of waiver of predeposit. As regards the tax demand of Rs.1,12,45,661/- Demand has been made in respect of construction of premises that the appellants have made for the land owners - Appellants have agreed that the construction done for the land owners is taxable service - Held that - As explained by the revenue, in the course of hearing, the Department has adopted the value of land owners portion of the constructed building on the same basis as has been done for the other part of the building which has been constructed for the individual buyers - While doing so, the Department has also allowed abatement of 67%. - Revenue has also demonstrated that the demand made by the Department is limited to only such portion of the landowners share of the constructed building which have been done after the levy came into force and not for the earlier period - Prima-facie, find that the value adopted by the Department has a basis and the same cannot be stated to be prima-facie un-reasonable - Decided against the assessee.

Issues Involved:
1. Waiver of predeposit requirement.
2. Prima-facie case for waiver of predeposit.
3. Tax demand and valuation of services.
4. Applicability of Notification 18/2004-S.T.
5. Taxability of construction services for landowners.
6. Limitation period for tax demand.

Detailed Analysis:

1. Waiver of Predeposit Requirement:
The Tribunal considered whether the requirement of predeposit should be waived for the appellants. The principles for waiver include the balance of convenience, undue hardship, and safeguarding the interest of revenue, as established in various Supreme Court decisions such as AC Vs. Dunlop India Ltd. and Benara Valves Ltd. Vs. CCE.

2. Prima-facie Case for Waiver of Predeposit:
The appellants argued for a waiver of predeposit and referring the matter to a Larger Bench, doubting the correctness of the decision in CCE, Raipur Vs. BSBK Pvt. Ltd. However, the Tribunal noted that an appeal against this decision was dismissed by the Delhi High Court and followed by several Division Benches. The Tribunal held that at the prima-facie stage, a reference to a Larger Bench is not permissible unless a final view is taken, as per precedents like SAIL Vs. CCE, Raipur and Amit Sales Vs. CCE, Raipur.

3. Tax Demand and Valuation of Services:
The tax demand covered the period from 10.9.04 to 31.3.07, with a differential tax amount of Rs.1,66,06,432/- and a penalty of Rs.1,75,00,000/-. The appellants had already paid substantial amounts towards the tax. The demand included two major components: Rs.37,43,887/- for services rendered after 10.9.2004 but received prior, and Rs.1,12,45,661/- for construction services for landowners. The Tribunal found the valuation by the adjudicating Commissioner reasonable and based on prevailing rates in Chennai.

4. Applicability of Notification 18/2004-S.T.:
The appellants claimed exemption for Rs.37,43,887/- under Notification 18/2004-S.T., which exempts service tax for amounts received before 10.9.2004. The Tribunal found that the appellants' case prima-facie fell within the ambit of this Notification, subject to verification of figures.

5. Taxability of Construction Services for Landowners:
The appellants contested the valuation of services for landowners. The Tribunal noted that the appellants agreed that construction for landowners is taxable but disputed the valuation. The Department's valuation was based on the same method used for individual buyers, with a 67% abatement. The Tribunal found this method reasonable and upheld the demand.

6. Limitation Period for Tax Demand:
The appellants argued the demand was time-barred. However, the Tribunal found that the adjudicating Commissioner had detailed reasons for the extended period due to the appellants' delay in providing necessary details and not paying the differential tax. The Tribunal held that the appellants did not have a prima-facie case on the ground of limitation.

Conclusion:
The Tribunal directed the appellants to predeposit Rs.80,00,000/- against the demanded tax, penalty, and interest. The balance amount of tax, penalty, and interest was waived during the appeal's pendency, subject to compliance with the predeposit order within eight weeks. The Tribunal emphasized that the appellants did not make a case for full waiver, considering the guidelines laid down by the Supreme Court and the facts of the case.

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