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2013 (9) TMI 590 - AT - Service TaxService tax under the category, Works Contract - Date of levy - stay - Service Tax liability has arisen on the appellant on the ground that the appellant had not discharged the correct Service Tax liability under the category of commercial and industrial construction services up to 01.06.07 for the contract entered by them with M/s Essar Oil Limited - Contract entered by the appellant with M/s Essar Oil Ltd. is a works contract - Appellant had discharged VAT applicable on such contract as and when running bills are raised and had filed returns with the VAT authorities Held that - Decision of Hon ble High Court in the case of Indian National Shipowners Association 2009 (3) TMI 29 - BOMBAY HIGH COURT , had settled the law that as and when a new entry comes into existence in the statute for levy of Service Tax, it would indicate that the said entry was not covered by any services earlier. Appellant s claim of the project being covered under works contract from 01.06.2007 is bonafide belief carried by the appellant as they had indicated in the return that they have received an amount as an advance for such contract - There are two views on this issue in as much as the Tribunal in the case of ABB Limited 2010 (7) TMI 335 - CESTAT, BANGALORE , held the view that Service Tax liability under the works contract will come into effect from 01.06.007 and it cannot be covered in any earlier entries while the decision of the co-ordinate Bench in the case of Alstom Projects India Ltd. 2011 (3) TMI 538 - CESTAT, NEW DELHI , takes a different view. When there are two views possible and both the matter being contested before the Hon ble Apex Court, the appellant s proposition that it is covered by the Stay Order of co-ordinate Bench in the case of M.M. Constructions 2012 (12) TMI 301 - CESTAT, NEW DELHI , is correct Appeal allowed Waiver of pre-deposit allowed stay granted.
Issues:
- Service Tax liability under the category of Commercial & Industrial Construction services. - Interpretation of works contract and Service Tax liability. - Discharge of correct Service Tax liability under works contract. - Application for waiver of pre-deposit of Service Tax, interest, and penalties. Issue 1: Service Tax liability under Commercial & Industrial Construction services: The appellant sought a waiver of pre-deposit of Service Tax, interest, and penalties amounting to Rs.71.96 crores confirmed by the adjudicating authority. The appellant contended that the amount in question was received before 01.06.2007 for a project executed post that date. The appellant argued that the contract was a works contract, not commercial or industrial construction services. The lower authorities alleged non-payment of correct Service Tax liability under commercial and industrial construction services. Issue 2: Interpretation of works contract and Service Tax liability: The appellant maintained that the project with M/s Essar Oil Ltd. constituted a works contract, evidenced by VAT payments and registration under the works contract category. The appellant claimed that the Service Tax liability should be based on the composite contract value, not individual components. The respondent argued that the appellant failed to fulfill the conditions for determining the Service Tax liability under the works contract service. Issue 3: Discharge of correct Service Tax liability under works contract: The Tribunal analyzed the nature of the contract, considering the appellant's VAT payments, project execution timeline, and legal precedents. The Tribunal noted conflicting views on the effective date of Service Tax liability under works contracts. Citing relevant case law, the appellant justified their position that the project fell under the works contract category post-01.06.2007. The Tribunal acknowledged the legal ambiguity and the pending appeals before the Apex Court, granting the appellant a waiver of the pre-deposit based on similar cases. Issue 4: Application for waiver of pre-deposit of Service Tax, interest, and penalties: After thorough consideration of submissions and records, the Tribunal found merit in the appellant's argument regarding the classification of the contract as a works contract. Relying on precedents and legal interpretations, the Tribunal granted the appellant's application for waiver of the pre-deposit of the disputed amounts, staying the recovery until the appeal's disposal. In conclusion, the judgment addressed the complex issues surrounding Service Tax liability under works contracts, emphasizing legal interpretations, precedents, and the appellant's compliance with tax regulations. The Tribunal's decision to grant the waiver of pre-deposit reflected the nuanced analysis of the contractual nature and tax obligations involved in the case.
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