2013 (1) TMI 491 - AT - Service Tax

Waiver of pre-deposit - Stay of recovery - Construction Services - Commercial or Industrial Construction Services - Site Installation Services - Site installation for ATMs Held that - These activities were covered by the definitions of Construction Service (up to 15.6.2005) and Commercial or Industrial Construction Service (from 16.6.2005) and, therefore, the appellant is liable to pay service tax. Having prima facie found no merit in the plea of limitation, they are liable to pay the entire demand of service tax. Considering the plea of abatement that the demand of service tax, if at all sustainable, should be restricted to an amount calculated at 33% of the gross amount received from the Bank. Therefore, direct the appellant to pre-deposit this amount of Rs.1.25 Crores. In favour of revenue

Issues:
1. Waiver of pre-deposit and stay of recovery sought by the appellant in relation to the adjudged dues for service tax and education cesses.
2. Classification of the activities undertaken by the appellant under the "Master Solutions Agreement" with the State Bank of India.
3. Plea of limitation raised by the appellant.
4. Claim of abatement under Notification No. 1/2006-ST by the appellant.
5. Prima facie assessment of the case by the Tribunal.

Analysis:
1. The appellant sought waiver of pre-deposit and stay of recovery for the adjudged dues, including a demand for service tax and education cesses amounting to Rs. 3,83,69,417 for the period from October 2004 to May 2007. The demand was based on the taxable value received by the appellant from the State Bank of India for providing "Site Installation Services" in relation to Automated Teller Machines. The Tribunal found no prima facie case for the appellant on merits or limitation grounds, directing them to pre-deposit a specific amount within six weeks for waiver of pre-deposit and stay of recovery for penalties and the remaining demand.

2. The activities undertaken by the appellant under the "Master Solutions Agreement" were scrutinized for classification. The appellant contended that the activities constituted a "Turnkey Project" and should be classified as 'works contract service'. However, the Tribunal observed that the appellant had previously paid service tax on some activities under the same Agreement, leading to the vivisection of the contract by the appellant. Consequently, the Tribunal held that the activities were covered under "Construction Service" and "Commercial or Industrial Construction Service," making the appellant liable to pay service tax.

3. The appellant raised a plea of limitation, arguing that all relevant information was provided to the department in May 2004, challenging any allegation of suppression of facts. The Tribunal, after careful consideration, found no merit in the plea of limitation, holding the appellant liable to pay the entire demand of service tax. The Tribunal also considered the appellant's plea of abatement under Notification No. 1/2006-ST, directing them to pre-deposit a specific amount within a stipulated timeframe.

4. The appellant claimed abatement under Notification No. 1/2006-ST if any part of the demand was sustained under specific heads. However, the appellant did not plead financial hardships. The Tribunal, while considering the plea of abatement, directed the appellant to pre-deposit a specific amount within six weeks for waiver of pre-deposit and stay of recovery for penalties and the remaining demand.

5. The Tribunal, after evaluating the submissions and terms of the Agreement, concluded that the activities undertaken by the appellant were covered under "Construction Service" and "Commercial or Industrial Construction Service," making them liable to pay service tax. The Tribunal also assessed the amount payable by the appellant based on the gross amount received from the Bank, directing them to pre-deposit a specific sum for waiver of pre-deposit and stay of recovery for penalties and the remaining demand.

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