2011 (6) TMI 380 - AT - Service Tax

Waiver of pre-deposit - Construction of Complex services - Held that - The adjudicating authority has held that the appellant is liable to discharge the above said Service Tax on the ground that they have not included the cost of free materials supplied by the recipients of the services - Appellant has been taking a plea before the adjudicating authority that even if the value of the free materials is to be included in the value for discharge of Service Tax liability, they should get the benefit of Notification No. 01/2006 wherein an abatement of 67% is given for the value of the materials consumed - Prima facie , the appellant is eligible for the benefit of abatement of 67% on the value of the goods which is sought to be included for the discharge of taxable service - Hence, the appellant is directed to pre-deposit.

Summary

Issues: Stay petition for waiver of pre-deposit of service tax amounts under different categories, including penalty and interest. Applicability of Notification No. 01/2006 for abatement of 67% on the value of materials consumed in the services provided.

Analysis:
1. The appellant filed a stay petition seeking the waiver of pre-deposit of various amounts, including service tax, education cess, SHE cess, interest, and penalties under different categories of services provided. The adjudicating authority confirmed the service tax liability on the appellant for 'Construction of Complex services,' stating that the appellant did not include the cost of free materials supplied by the recipients of the services.

2. The appellant contended that the value of free materials should not be included in the service tax liability. The appellant argued that if the value of materials is to be included, they should benefit from Notification No. 01/2006, which provides for a 67% abatement on the value of materials consumed. The appellant estimated the differential service tax liability to be approximately Rs. 27.02 lakhs if the cost of materials is included. The Tribunal found this issue to be arguable, stating that the cost of materials should be included as per the Service Tax Valuation Rules, and the appellant may be eligible for the abatement.

3. The Tribunal directed the appellant to pre-deposit an amount of Rs. 27,00,000 within four weeks and report compliance by a specified date. Upon compliance, the condition of pre-deposit for the balance amounts was waived, and the recovery stayed until the appeal's disposal. The Tribunal emphasized that a detailed examination of all issues would be conducted during the final hearing, indicating that the appellant's eligibility for abatement would be thoroughly assessed at that stage.

Conclusion: The Tribunal granted partial relief to the appellant by waiving the pre-deposit condition for the balance amounts subject to the initial payment and compliance. The decision highlighted the need for a detailed examination of the issues, particularly regarding the inclusion of the cost of materials in the service tax liability and the potential applicability of the abatement provision under Notification No. 01/2006.