2013 (8) TMI 490 - AT - Service Tax

Erection, Commissioning and Installation Services appellant contended that the majority of the activity undertaken by them relates to laying of cables on the roadside is not taxable as per Circular No. 123/05/2010-TRU dated 24.05.2010 Held that - The procedure adopted by the lower appellate authority is not permissible under law - Any order directing the party to pay any amount should be in writing and has to be tendered as per the provisions of Section 37 CE Act, - The lower appellate authority has not passed any interim stay order, but directed the appellant to make a pre-deposit at the time of personal hearing - matter remanded back. Service tax on installation charges appellant admitted that they might be liable to pay Service Tax on installation services - However, they were under bona fide belief that they are not liable to pay Service Tax on these activities Held that - Appellant has accepted the partial duty liability under the category of Erection, Commissioning and Installation Services on account of installation of lights, transformer etc. complete waiver of duty cannot be granted. Stay application After submitting the amount ordered by the court stay to be allowed appeal decided in the favour of the assessee with conditions.

Summary

Issues involved:
- Appeal against Service Tax demand for laying of cables, installation of electrical equipment, street lights, and transformers.
- Dismissal of appeal by lower appellate authority for non-compliance with Section 35F of the Central Excise Act, 1944.
- Dispute over tax liability on installation services.
- Legality of the pre-deposit directive by the lower appellate authority.

Analysis:
1. The appellant, engaged in activities like laying cables, installing electrical equipment, street lights, and transformers, faced a Service Tax demand of Rs.45,86,154 for the period 11.07.2005 to 30.03.2007. The Commissioner confirmed the demand, imposed penalties, and directed a pre-deposit of Rs.20 lakhs for appeal compliance. The lower appellate authority dismissed the appeal due to non-compliance with Section 35F.

2. The appellant argued that most activities related to cable laying, particularly for M/s MIDC, were non-taxable per Circular No. 123/05/2010-TRU. However, they acknowledged potential tax liability for installation services, believing otherwise in good faith.

3. The Revenue contended that the appellant's activities encompassed taxable services like street light and transformer installations, as per the Circular, warranting tax liability. The appellant estimated a reduced liability of approximately Rs.3.5 lakhs if tax was due on certain installations.

4. The Tribunal noted the absence of an interim stay order by the lower appellate authority, criticizing the informal pre-deposit directive during a personal hearing as impermissible under law. The Tribunal directed a proper pre-deposit of Rs.5 lakhs within four weeks for further consideration by the lower appellate authority, emphasizing compliance with legal procedures.

5. Consequently, the Tribunal allowed the appeal for remand, requiring compliance with the revised pre-deposit terms and a fresh hearing by the lower appellate authority to decide the case on merit after providing adequate hearing opportunities to the appellant. The stay application was also resolved in the process.