2012 (5) TMI 263 - AT - Service Tax

Waiver of pre-deposit Construction of Complex Services and Commercial or Industrial Construction Services - applicant has received amounts as advance towards the services rendered and that they have failed to pay Service Tax on the said advance amounts - applicant has received free supply materials from their clients and the value of the said materials have not been included in the gross amount for the purpose of arriving at the Service Tax payable Held that - Commissioner has not given any findings relating to the specific claim of duplication of demand in respect of Rs.81 lakhs which have been paid subsequent to audit objection raised by the department. applicant has not made out a case in respect of the other parties from whom they have claimed that they have received free supply materials . We do not find justification in not including the value of free supply materials in respect of selected parties. The plea of wrong invokation of extension of limitation is not prima facie acceptable inasmuch as the applicant has not shown that they have made available details about receipt of such free supply materials and their non-inclusion of the same in the gross amount. Applicant directed to deposit in part.

Summary

Issues:
1. Whether the services rendered fall under "Works Contract" or "Construction of Complex Services" and "Commercial or Industrial Construction Services" for Service Tax purposes.
2. Whether the demand for Service Tax on advance amounts and "free supply materials" is justified.
3. Whether the demand is time-barred.
4. Whether the value of "free supply materials" should be included in the gross amount for Service Tax calculation.
5. Whether there was a duplication of demand and if the Commissioner provided findings on this claim.

Analysis:

1. The applicant argued that their services should be categorized as "Works Contract" and not taxable before 1.6.2007. However, the Tribunal disagreed, stating that the services were correctly classified under "Construction of Complex Services" and "Commercial or Industrial Construction Services" for the relevant period.

2. The Tribunal found that the applicant had received advances for services rendered and failed to pay Service Tax on these amounts. Additionally, they received "free supply materials" from clients, and the value of these materials was not included in the gross amount for calculating Service Tax. Consequently, a significant Service Tax demand was made along with interest and penalties.

3. The applicant claimed that the demand for around Rs.81 lakhs was erroneous as they had paid the full amount based on a subsequent audit. However, the Commissioner did not provide findings on this claim of duplication of demand, leading to uncertainty regarding the actual payment status.

4. Regarding the inclusion of the value of "free supply materials," the applicant argued that they had included this value for some clients based on previous cases and legal precedents. They contended that the demand was time-barred due to the issuance of the show-cause notice after a considerable delay.

5. The Tribunal acknowledged that the Commissioner had not addressed the duplication of demand issue adequately. They found merit in the applicant's argument for including the value of "free supply materials" for certain parties but not for others. The Tribunal directed the applicant to deposit a specified amount and waived the pre-deposit of the balance pending the appeal's disposal.

This detailed analysis of the judgment highlights the key issues raised, the arguments presented by both sides, and the Tribunal's findings and directions, providing a comprehensive overview of the legal proceedings and decision.