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2013 (2) TMI 355 - AT - Service TaxSupply of water supply to SEZ It is claimed that inasmuch as the State Government is committed to provide water supply to SEZ, the State Government of Rajasthan should be treated as either a developer of SEZ or a contractor. Once the State Government of Rajasthan is treated as a developer or a contractor, the applicant becomes a sub-contractor and therefore, the activities of the sub-contractor in terms of agreement with a Department of a State should be treated as supply of services to SEZ developer and therefore, the services rendered by them are exempted. Held that - Government of Rajasthan could not be treated as a developer of SEZ or a contractor. Therefore, the applicant s activities cannot be treated, prima facie, as service rendered to any SEZ developer. On the aspect of time-bar, basis for availing exemption by them was their claimed belief that the Government of Rajasthan was a developer of SEZ or a contractor which cannot be treated as bona fide No financial hardships pleaded - Appellant was directed to deposit an amount of Rs. 30 lakhs within a period of six weeks report compliance to Assistant Registrar. The Assistant Registrar to report to the Bench .Subject to compliance, there shall be waiver of pre-deposit of balance of dues as per the impugned order and stay of recovery thereof till the disposal of the appeal.
Issues involved:
1. Whether the State Government of Rajasthan can be considered a developer or contractor for the purpose of providing water supply to a Special Economic Zone (SEZ)? 2. Whether the services rendered by the applicant to the State Government of Rajasthan are exempted from service tax under the category of works contract service? 3. Whether the applicant is entitled to the benefit of the Composition Scheme for works contract services? 4. Whether the invocation of a longer period for service tax demand was justified? Analysis: 1. The applicant argued that the State Government of Rajasthan should be treated as either a developer or a contractor for providing water supply to the SEZ developed by a private entity. However, the Tribunal did not agree with this contention, holding that the State Government cannot be considered a developer or contractor for the SEZ. Consequently, the applicant's activities cannot be deemed as services rendered to any SEZ developer, leading to a decision against the applicant on this issue. 2. The applicant sought waiver of pre-deposit of a substantial service tax demand under the works contract service category. The Tribunal noted that the applicant's belief that the State Government of Rajasthan was a developer or contractor for the SEZ was not bona fide, leading to a rejection of the exemption claim. Additionally, the Tribunal found no financial hardships pleaded by the applicant. As a result, the Tribunal directed the appellant to deposit a significant amount within a specified period, with a waiver of pre-deposit for the balance of dues subject to compliance. 3. The applicant also claimed that they were not extended the benefit of the Composition Scheme applicable to works contracts, contending that the service tax demand was inflated. The Tribunal acknowledged this claim but emphasized that the basis for availing exemption was not bona fide, leading to a decision against the applicant on this aspect as well. 4. Regarding the invocation of a longer period for service tax demand, the Tribunal found that the applicant's argument regarding the State Government's role in the SEZ did not justify the invocation of a longer period. The Tribunal held that the invocation was not justified, further contributing to the decision against the applicant on this issue. In conclusion, the Tribunal ruled against the applicant on all key issues, including the treatment of the State Government of Rajasthan, exemption from service tax, benefit of the Composition Scheme, and the justification for the longer period invocation. The judgment emphasized the lack of merit in the applicant's claims and directed a significant deposit within a specified timeline for a waiver of pre-deposit for the balance of dues.
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