2011 (10) TMI 500 - AT - Service Tax

Waiver of pre-deposit - Applicants are engaged in activities relating to construction of assembly shop press shop office buildings utility building canteen building guest houses etc - Held that applicant prima facie has not made out a case for unconditional waiver. By their own admission their activities are liable to service tax under Works Contract from 01.06.2007 but they have not taken registration for the said services till 01.04.2008 - Decided against the assessee by way of direction to deposit Rs. 1 crore

Summary

Issues:
1. Whether the activities of the applicants fall under "Construction Services," "Commercial or Industrial Construction Services," or "Works Contract" for different periods.
2. Liability of the applicants to pay service tax prior to 01.06.2007.
3. Applicability of the decision of the Hon'ble High Court of Madras in a similar case.
4. Requirement of pre-deposit of dues as per the impugned order.

Analysis:
1. The applicants were engaged in various construction activities, which the department categorized differently for different periods. The department treated the activities as falling under "Construction Services," "Commercial or Industrial Construction Services," and "Works Contract" for various time frames, leading to a total demand of service tax, interest, and penalties. The applicants argued that they were not liable to pay service tax before 01.06.2007 and relied on a decision of the Hon'ble High Court of Madras in a similar case. The JCDR supported the order of the Commissioner, emphasizing the duty liability under the Works Contract for a specific period. The Tribunal observed that the judgment cited by the applicants was not directly applicable to their case, as it involved different activities. The Tribunal found that the applicants had not established a case for unconditional waiver and directed them to deposit a specified amount while waiving the pre-deposit of the balance amount.

2. The applicants contended that they were not liable to pay service tax before 01.06.2007. They argued that they discharged service tax under Works Contract services from 01.06.2007 onwards and availed a concessional rate under the Works Contract Rules. The JCDR, however, maintained that the activities rightly fell under Commercial and Industrial Construction Services before 01.06.2007 and under Works Contract thereafter. The Tribunal noted that the applicants had not registered for the Works Contract services until a specific date, which required detailed examination during the final hearing. The Tribunal acknowledged a partial deposit made by the applicants and directed them to deposit an additional sum within a specified period to waive the pre-deposit of the remaining dues.

3. The applicants relied on a decision of the Hon'ble High Court of Madras in a case involving similar activities. However, the Tribunal found that the cited judgment was specific to erection, commissioning, and installation under Works Contract for laying pipelines, which differed from the construction activities undertaken by the applicants. The Tribunal emphasized the need to assess the facts and findings of the Commissioner in the present case, indicating that the cited judgment might not directly apply to the applicants' situation.

4. The Tribunal, after considering submissions from both sides and examining the records, directed the applicants to deposit a specified amount within a set timeframe to waive the pre-deposit of the remaining dues as per the impugned order. The Tribunal granted a stay on the recovery of the dues during the pendency of the appeal, emphasizing the need for compliance with the directive on the specified date.