2009 (6) TMI 674 - AT - Service Tax

Stay petition and appeal - application for waiver of pre-deposit of Service Tax - demand is confirmed on the ground that applicant is undertaking industrial construction service which is liable for service tax - During argument, the applicant had submitted that almost 50% of the contracts are in respect of Industrial construction. issue regarding taxability of the service is not contested by the applicant before the adjudicating authority. applicants registered with the Revenue authorities as service provider, however, had not filed any returns hence revenue was not aware whether applicant provided any taxable service or not. - application for waiver of pre-deposit allowed partly.

Summary

Issues:
1. Restoration of stay petition and appeal.
2. Waiver of pre-deposit of Service Tax and penalties.
3. Nature of services provided by the applicant.
4. Time-barred demand.
5. Financial hardship claimed by the applicant.

Restoration of Stay Petition and Appeal:
The applicant filed an application for restoration of the stay petition and appeal, which were initially dismissed due to lack of clearance from the COD. The applicant subsequently obtained the necessary clearance, leading to the order dismissing the stay petition and appeal being recalled. Consequently, both the stay petition and appeal were restored to their original number.

Waiver of Pre-deposit of Service Tax and Penalties:
The applicant sought a waiver of pre-deposit of Service Tax amounting to Rs. 1,37,25,553/- and penalties, having already deposited Rs. 37,72,490/-. The demand was confirmed based on the applicant's provision of industrial construction services, which were deemed taxable. The applicant argued that nearly 50% of the contracts did not involve construction activities, challenging the sustainability of the demand. Additionally, the applicant claimed that the demand was time-barred as they were registered as a service provider in 2004, precluding any allegation of suppression.

Nature of Services Provided:
The applicant contended that they were not solely engaged in industrial construction services, citing contracts for labor supply and cleaning. However, upon examination of sample contracts, it was revealed that some contracts did indeed pertain to industrial construction works. The Tribunal noted that the issue of the service's taxability was not disputed before the adjudicating authority, and the lack of filed returns prevented the revenue from determining the provision of taxable services.

Time-barred Demand:
The Revenue argued that the demand was validly made within the extended period due to the applicant's failure to file returns despite being registered as a taxable service provider. This lack of returns hindered the Revenue's awareness of the taxable services provided, justifying the demand within the extended timeframe.

Financial Hardship Claim:
The applicant pleaded financial hardship, citing company losses. Despite not establishing a prima facie case for a complete waiver of pre-deposit, the Tribunal directed the applicant to deposit Rs. 30.00 Lakhs within eight weeks, in addition to the amount already paid. Upon compliance with this directive, the pre-deposit of the remaining Service Tax and penalties would be waived, and the recovery stayed during the appeal's pendency, with a compliance report due on 19-8-09.