2011 (4) TMI 1052 - AT - Service Tax

Pre-deposit of service tax along interest and penalty of identical amount imposed under the provisions of Section 78 of Finance Act, 1994. In addition, penalty of Rs. 5,000/- stands imposed under Section 77 of Finance Act and penalty of Rs. 200/- per day stands imposed under Section 76 of the Finance Act Held that - demand stands confirmed by the appellant in respect of GTA services availed by them in respect of which they were required to pay service tax as recipient of GTA services. The appellants have accepted that during the period in question they should have discharged the service tax liability but submitted that the same had not been discharged on account of not being aware of the same, appellant have not pleaded any financial hardship and have not placed any evidence to that effect on record, Subject to deposit of amount, the pre-deposit of balance amount of duty and entire amount of penalties imposed under various sections of the Finance Act, 1994 shall stand waived and its recovery is stayed during the pendency of appeal

Issues involved:
1. Condition of pre-deposit of service tax
2. Classification of services under 'Management, Maintenance or Repair Services'
3. Exemption for repair of roads under 'Commercial or Industrial Construction Services'
4. Liability for service tax on GTA services
5. Financial hardship plea for pre-deposit waiver

Analysis:

1. Condition of pre-deposit of service tax:
The appellant sought to dispense with the pre-deposit condition of service tax amounting to Rs. 75,64,939 along with interest and penalty imposed under the Finance Act, 1994. The Tribunal noted the appellant's engagement in providing services falling under 'Management, Maintenance or Repair Services' category, which became taxable from 16-6-2005. The lower authorities confirmed the demand through an impugned order after issuing a show cause notice.

2. Classification of services under 'Management, Maintenance or Repair Services':
The appellant contended that repair of roads should be exempted under 'Commercial or Industrial Construction Services' as per the Finance Act, 1994. However, the Tribunal did not find merit in this argument. It clarified that maintenance or repair of roads are indeed leviable to service tax under 'Management, Maintenance or Repair Services' category, as per Board Circulars. The appellant's contention of services falling outside the taxable service category was dismissed.

3. Exemption for repair of roads under 'Commercial or Industrial Construction Services':
The appellant's argument regarding the exemption for repair of roads under 'Commercial or Industrial Construction Services' was refuted based on the introduction of a separate category for management, maintenance, or repair services. Board Circulars clarified that while construction of roads is taxable, management, maintenance, or repair of roads attract service tax. The Tribunal found no prima facie merit in the appellant's contention.

4. Liability for service tax on GTA services:
A part of the demand was confirmed by the appellant concerning GTA services for which they were liable to pay service tax as recipients. The appellant acknowledged their liability but claimed non-payment due to lack of awareness. The Tribunal considered this aspect while determining the pre-deposit amount.

5. Financial hardship plea for pre-deposit waiver:
The Tribunal noted that the appellant had deposited a partial amount during adjudication and did not demonstrate financial hardship. Considering the overall circumstances, the Tribunal directed the appellant to deposit an additional amount within a specified period for waiver of the remaining duty and penalties. The recovery of the waived amounts was stayed pending appeal.

In conclusion, the Tribunal's decision upheld the pre-deposit requirement while providing clarity on the classification of services and liability for service tax, ultimately directing the appellant to make additional deposits to avail of waivers on the outstanding amounts.

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