2013 (6) TMI 539 - AT - Service Tax

Abatement of 67% - Valuation - Notification No.1/2006/ST dated 1/03/2006 or the benefit of Notification No.12/03-ST dated 20/06/2003 - erection or installation service - works contract service - Held that - the issue involved in this case is that the appellant is required to discharge service tax on the entire value received by them from their clients. On perusal of records, we find that appellant has issued the work contracts for doing insulation work, either for hot or cold insulation, for completion of such insulation work, appellant is using Aluminum sheets, Cold insulation with Thermocol and insulation of pipeline with black superioan sleeve providing and fixing of black superioan sleeve with cellotape, insulation with black nitrite rubber foam, sheet etc. Though the ld. Counsel tried to convince us, by bringing to our notice various bills as regards materials consumed by appellant, that they have paid VAT, the said accounting pattern of appellant is confusing and is not bringing out details of the materials which have been consumed by appellant. - the issue is highly debatable and needs considerable time to come to a conclusion on merits - stay granted partly.

Summary

Issues:
Service tax liability under Notification No.1/2006/ST dated 1/03/2006 - Ineligibility of abatement - Applicability of Notification No.12/03-ST dated 20/06/2003 - Confusion in accounting pattern - Requirement of pre-deposit for hearing the appeal.

Analysis:
The Stay Petition challenged an Order confirming Service Tax liability, interest, and penalties under Sections 76 & 78 of the Finance Act, 1994, amounting to Rs.94,34,989. The adjudicating authority found the appellant availed ineligible abatement of 67% under Notification No.1/2006/ST. The appellant contended they provided insulation services using materials like Aluminum sheets, Thermocol, and black nitrite rubber foam, claiming benefits under Notification No.1/2006 and later under Notification No.12/03-ST.

Upon review, the Tribunal noted the confusion in the appellant's accounting pattern regarding materials consumed. The issue revolved around whether the appellant should discharge service tax on the total value received from clients. Despite the appellant's attempts to demonstrate VAT payments through bills, the lack of clarity in the accounting raised concerns. The Tribunal deemed the matter highly debatable, requiring further examination at the final appeal stage.

To proceed with the appeal, the Tribunal directed the appellant to deposit Rs.15,00,000 within eight weeks and report compliance before the Deputy Registrar. Conditional on this deposit, the application for waiver of the remaining balance pre-deposit was granted, and recovery stayed pending appeal disposal. This decision aimed to ensure the appellant's commitment to the process while allowing for a thorough review of the complex issues involved.

The judgment, delivered on 29.4.2013 by M V Ravindran and H K Thakur, JJ., highlighted the need for detailed scrutiny regarding the service tax liability, abatement eligibility, and accounting practices. The Tribunal's decision to impose a pre-deposit condition balanced the interests of both parties, facilitating a comprehensive assessment of the case before final resolution.