2012 (12) TMI 704 - AT - Service Tax

Commercial or Industrial Construction Services - not discharging the correct service tax liability - Held that - The correct way of calculating the amount of service tax liability on the appellant on the day when he renders the services and raise the bills and also for the adjustment of the amounts received as advance for mobilisation and service tax liability discharged on such advance amount. The calculations as has been worked out by the department seems to be relevant, considering the decision of Vigyan Gurukui 2011 (9) TMI 809 - CESTAT, NEW DELHI but this decision does not consider the fact of mobilisation amount which has been received by the assessee and discharging the service tax liability thereon. All these issues need to be gone into detail which can be done only at the time of final disposal of appeal thus the appellant directed to deposit an amount of Rs. 1,00,000/- within a period of four Weeks from today and report compliance on 13.12.2012.

Summary

Issues:
Calculation of service tax liability on running bills and mobilisation advance, adjustment of advance against service tax liability, interpretation of relevant legal provisions and case laws.

Analysis:
The appellant filed a stay petition seeking the waiver of pre-deposit of Rs. 4,03,827 confirmed as service tax and penalty under the Finance Act, 1994. The adjudicating authority confirmed the amounts as service tax liability, interest, and penalties related to Commercial or Industrial Construction Services. The appellant's counsel argued that the service tax liability was discharged correctly by adjusting mobilisation advance against running bills. The department, however, calculated the liability differently, resulting in a significant difference of Rs. Four lakhs, which was confirmed. The counsel referred to Section 66B, statutory definition of taxable services, and relevant case laws to support their argument that tax liability should be calculated based on when services are rendered. The departmental representative cited a Tribunal decision to justify their calculation method.

Upon considering the submissions, the Tribunal identified the key issue as the correct calculation of service tax liability when services are rendered and bills are raised, along with the adjustment of advance amounts against service tax liability. The Tribunal noted that the department's calculations seemed relevant based on a previous decision but acknowledged the lack of consideration for the mobilisation amount received by the appellant. The Tribunal deemed further examination necessary at the final appeal disposal. As a result, the appellant was directed to deposit Rs. 1,00,000 within four weeks, with the balance pre-deposit waiver allowed subject to compliance, and recovery stayed until the appeal's final disposal.