2013 (8) TMI 168 - AT - Service Tax

Stay application Waiver of pre-deposit - Works taken up by the assessee is in nature of erection work with procurement of material certain scope within the appellant s contract Impugned order artificially bifurcated the services into erection, installation and commissioning services and man power supply services without considering the issue of classification and in terms of Section 65A of Finance Act, 1994 - Activity undertaken by the appellant are under Works Contract and substantial supply of materials are made by them in the course of execution of composite work of construction and in order to undertake that work, the appellant procured and used consumables like sand, paint, misc. iron and steel items; billed the same under works contract and discharged the sales tax as per prevalent VAT laws - Appellant being a sub-contractor, during the relevant period, was not required to pay any Service Tax, as the main contractor has paid such tax in totality - Adjudicating authority had erred in denying the abatement benefit to the appellant Held that - Issue raised by the appellant needs deeper consideration, which can be done only at the time of final disposal of appeal as it requires appreciation of the law and factual matrix - Appellant has already deposited an amount of Rs.14.46 lakhs, as we find that the issue is arguable one, appellant directed to deposit further an amount of Rs.5 lakhs (Rupees Five Lakhs only) within a period of eight weeks.

Summary

Issues:
Waiver of pre-deposit of Service Tax liability, interest, and penalty for the period April 2007 to March 2010; Classification of services under Works Contract; Correct value declaration in returns; Limitation period for the case.

Waiver of Pre-Deposit:
The appellant filed a Stay Petition seeking waiver of pre-deposit of confirmed Service Tax liability, interest, and penalty. The appellant argued that the Revenue's case was incorrect as the services provided were primarily in the nature of 'erection work' under Works Contract, making them liable for only 4% Service Tax. The appellant contended that the impugned order wrongly bifurcated services without considering classification issues. Reference was made to circulars and tribunal decisions supporting the appellant's position. The appellant also highlighted the denial of abatement benefits and the payment made towards tax, interest, and penalty.

Classification of Services:
The issue of correct classification of services under Works Contract was a key point of contention. The appellant claimed that the services provided fell under Works Contract, entitling them to a lower Service Tax rate. However, the Tribunal noted the lack of evidence regarding the materials purchased and used during contract execution. The Tribunal emphasized the need for deeper consideration of the classification issue, requiring a detailed analysis at the final disposal stage. The appellant's argument on limitation was also considered a mixed question of fact and law.

Correct Value Declaration:
The appellant's failure to declare the correct value of services in returns filed with the Department was highlighted by the Departmental Representative. This discrepancy led to the demand for additional Service Tax. The Tribunal acknowledged the need for a thorough examination of the value declaration issue, especially concerning the materials procured and utilized during contract execution.

Limitation Period:
The issue of limitation was raised, indicating a mixed question of fact and law. Considering the appellant's partial deposit of the demanded amount, the Tribunal directed the appellant to deposit a further sum within a specified period. The Tribunal stressed the arguable nature of the issue, requiring a detailed review at the final disposal stage.

Conclusion:
The Tribunal allowed the application for waiver of pre-deposit of the balance amounts, staying the recovery until the appeal's final disposal. The detailed analysis of the issues highlighted the complexity and depth of considerations required for resolving the classification, value declaration, and limitation aspects of the case.