2012 (9) TMI 202 - AT - Service Tax

Demand of service tax - Appellants are in the business of constructing buildings - levy was introduced with effect from 10-9-2004 Held that - Construction of shops were completed before 10-9-2003 - construction work was completed before levy was imposed on 10-9-2004 and there is no merit in the case of the department.

Summary

Issues:
1. Taxability of payment received for construction work done before the imposition of a new levy on commercial or industrial construction service.
2. Validity of duty demand and penalties under Sections 76, 77, and 78 of the Finance Act, 1994.
3. Requirement of completion certificate issued by Municipal Authorities to determine tax liability.
4. Consideration of waiver of pre-deposit for admission of appeal.
5. Decision on the appeal regarding the completion date of construction work and tax liability.

Analysis:
1. The Appellants, engaged in construction, received payment for constructing 10 shops near a bus stand for the Municipal Corporation. The payment was received on 16-9-2004, shortly after the levy on commercial or industrial construction service came into effect on 10-9-2004. The Revenue argued that the payment should be taxable. A show cause notice was issued, and penalties were imposed. The Appellant contended that the payment was for work done before the levy and not taxable based on a clarification from the Board. They presented a joint measurement report dated 1-6-2004 to support completion before the levy.

2. The Appellant's Counsel argued that the payment received post-levy was for work completed earlier, evidenced by the joint measurement report. The Service Tax was to be paid only for services rendered after the imposition of the levy. The Counsel contended that duty demand and penalties were unjustified. In contrast, the SDR argued that without a completion certificate predating 10-9-2004, the duty must be paid as demanded.

3. The Tribunal waived the pre-deposit requirement for appeal admission due to the matter's brevity and the small amount involved. The Tribunal then considered the arguments. It noted that the construction was completed before 10-9-2004, with payment received on 16-9-2004, indicating completion prior to the levy. The joint measurement report and the small part of the contract related to obtaining a completion certificate supported the Appellant's claim. The Tribunal found merit in the Appellant's argument, concluding that the construction was finished before the levy, and the department's case lacked substance.

4. Ultimately, the Tribunal allowed the appeal, providing consequential relief to the Appellant. The stay petition and appeal were disposed of accordingly. The Tribunal's decision was based on the completion date of the construction work and the absence of tax liability due to the work being completed before the levy's imposition.