2012 (6) TMI 690 - AT - Service Tax

Civil Work such as, foundation, control room, etc., and electrical work such as, earthing station, transformer etc., including material supplies - Held that - service tax could not be demanded on Works Contract which at that time was held to be not vivisectable. They were under a bona fide belief that Works Contract was not liable to tax. Demand is time-bared and, therefore, not sustainable. Regarding Erection Charges - service tax of ₹ 3.25 crores (approx.) has already been paid out of ₹ 3.64 crores confirmed the Commissioner has examined the claim of abatement and rejected it on the ground of certain discrepancy . However, taking into account those discrepancies only an amount of ₹ 4 lakhs can be said not to have been paid by the assessees. Pre-deposit waiveed Regarding TNEB Infrastructure Charges - Held that - As per the Electricity Act, 2002, it is the responsibility of the generating company to establish transmission lines, sub-station etc., and the wind mill operator is required to pay Infrastructure Development charges to the Electricity Board towards strengthening the power evacuation capability and connectivity to the power handling system of Electricity Board. These charges are paid on behalf of their clients by the assessees to the Tamil Nadu Electricity Board and, therefore, the assessee have made out a prima facie for waiver. Regarding Land Development Charges - demand was raised for tax under a particular category, while the impugned order demands tax in another category, which was not the case made out in the show-cause notice. Pre-deposit waived.

Summary

Issues:
1. Time-barring of demand related to Civil Work and Electrical Work charges.
2. Payment discrepancy in Erection Charges demand.
3. Liability for TNEB Infrastructure Charges.
4. Category mismatch in Land Development Charges demand.
5. Overall waiver of demands and pre-deposit.

Analysis:
1. The demand for Civil Work and Electrical Work charges was contested on the grounds of limitation. The Tribunal acknowledged the assessees' belief that Works Contract was not taxable during the relevant period based on previous Tribunal decisions. The demand of Rs.3.46 crores was considered time-barred and unsustainable.

2. In the case of Erection Charges, a payment discrepancy was noted, with Rs.3.25 crores already paid out of Rs.3.64 crores confirmed. The Tribunal found only Rs.4 lakhs to be outstanding due to certain discrepancies and waived the pre-deposit requirement for this demand.

3. Regarding TNEB Infrastructure Charges, it was explained that windmill operators are required to pay these charges to the Electricity Board for infrastructure development. The assessees paid these charges on behalf of their clients, establishing a prima facie case for waiver of this demand.

4. The demand related to Land Development Charges faced a challenge as the tax category in the impugned order did not align with the category in the show-cause notice. The Tribunal found a strong prima facie case in favor of the assessees and waived the pre-deposit requirement for this demand.

5. Overall, out of the total demand of approximately Rs.21 crores, Rs.4.71 crores were not disputed and already paid. The Tribunal held that demands of around Rs.3.25 crores were paid, and the remaining balance was deemed unsustainable. Consequently, the assessees were granted unconditional waiver of demands, pre-deposit, tax, interest, and penalty during the appeal's pendency to stay recovery proceedings.