2011 (10) TMI 439 - AT - Service Tax

Waiver of pre-deposit - The department felt that the activities undertaken by the applicant shall come under the category of Construction of Complex services and therefore show cause notice dated 15-1-2010 proposing demand of service tax of Rs. 1, 96, 09, 763/- was issued and in pursuance of the said SCN the impugned order with consequences as mentioned above was passed - the same may become taxable w.e.f. 1-7-2010 in view of Notification No. 36/2010-S.T. dated 28-6-2010 as amended by Notification No. 343/3/2010 dated 29-6-2010 since payments have been received prior to 1-7-2010 no service tax is payable - service tax on construction of complex services is in vogue w.e.f. 16-6-2005 and therefore service tax is payable under the said category w.e.f. 16-6-2005. This position stands notwithstanding the introduction of Works Contract Service w.e.f. 1-6-2007 - The non-registration as a service provider in spite of their having entered a contract with the customers that applicable service tax as shall be indicated and demanded by the builder/promoter shall be paid and their furnishing the relevant details latest by 15-7-2009 go to show that the SCN dated 15-1-2010 may not be time-barred - Pre-dposite ordered partly.

Summary

Issues:
Waiver of pre-deposit of service tax demand, classification of activities under "Construction of Complex" services, applicability of service tax on residential project, interpretation of legal provisions, time-barred demand, penalty imposition.

Analysis:

1. Waiver of Pre-deposit:
The application sought waiver of pre-deposit of service tax demand totaling Rs. 1,96,09,763/- along with interest and penalties under Sections 77 and 78 of the Finance Act, 1994. The Tribunal heard both sides extensively and considered the arguments presented by the appellant's advocate and the respondent's representative.

2. Classification of Activities:
The appellant argued that they were not engaged in constructing a "residential complex" but in building independent villas. They emphasized that the 97 villas were not physically connected and should not be considered part of a residential complex. Reference was made to legal precedents to support this argument.

3. Applicability of Service Tax:
The Tribunal analyzed the definition of "taxable service" and the exclusion clause to determine if the activities fell under the purview of service tax. The discussion included the amendments introduced by the Finance Act, 2000, and relevant notifications to ascertain the liability for service tax.

4. Interpretation of Legal Provisions:
Both sides presented their interpretations of legal provisions regarding the construction of a residential complex and the levy of service tax. The Tribunal scrutinized the definitions and explanations provided in the law to arrive at a conclusion.

5. Time-barred Demand and Penalty:
The appellant contended that the demand for service tax was time-barred due to a bona fide belief that no tax was payable. The respondent argued against this claim, asserting that the entire sale consideration had been received before the specified date.

6. Judgment:
After considering the submissions and examining the records, the Tribunal found that the appellant had not established a strong case for a full waiver of the dues. Consequently, the appellant was directed to deposit a specified amount within a stipulated period. Failure to comply would lead to the vacation of stay and dismissal of the appeal.

In conclusion, the Tribunal's decision was based on a thorough analysis of the legal provisions, precedents, and factual circumstances surrounding the case. The judgment highlighted the importance of compliance with tax regulations and the consequences of non-compliance.