2013 (11) TMI 97 - AT - Service Tax

Service of trenching and laying of PLB pipes and cables for BSNL at various places - Commercial or industrial construction service - Held that - for the purpose of waiver of pre-deposit and stay, the appellant has made out a prima facie case that the service rendered by them is not classifiable under commercial or industrial construction service . What is required to be examined in this case is whether the service tax liability arises if both sides agree that the service is liable to service tax or an independent authority can still decide the service is liable to service tax. Prima facie, in our opinion, the dispute can be raised even at a later stage. - appellant have made out a prima facie case in their favour on merits - stay granted.

Summary

Issues:
1. Classification of service provided by the appellant under 'commercial or industrial construction service' for service tax liability.
2. Participation of the appellant in adjudication process and appeal proceedings.
3. Acceptance of service tax liability by both parties involved.
4. Consideration of prima facie case for waiver of pre-deposit and stay against recovery of dues during appeal.

Analysis:
1. The appellant provides trenching and laying of PLB pipes and cables for BSNL. The issue revolves around the classification of this service under 'commercial or industrial construction service' for service tax liability, effective from 16.6.2005. Proceedings were initiated resulting in the confirmation of demand for service tax, interest, and penalties under Finance Act, 1994.

2. The appellant did not participate in the adjudication process before the original authority. However, during the appeal proceedings, the appellant contended that their activities do not fall under 'commercial or industrial construction service.' They relied on a circular clarifying that laying cables under or alongside roads does not constitute such a service. Despite having started paying service tax from January 2007, the appellant argued that their activity should not be considered a taxable service.

3. Both parties, BSNL and the appellant, acknowledged the liability for service tax under 'commercial or industrial construction service.' The appellant had received the service tax amount from BSNL. The acceptance of liability by both sides without contest before the original authority led to the Commissioner's order being upheld based on this ground.

4. The Tribunal considered the submissions from both sides and found that the appellant had made a prima facie case that their service does not fall under 'commercial or industrial construction service.' The key question was whether the service tax liability stands if both parties agree on it or if an independent authority can still determine the tax liability. The Tribunal opined that a dispute could be raised later, even if both parties initially agree. Given the prima facie case in favor of the appellant on merits, the Tribunal waived the pre-deposit requirement and granted a stay against the recovery of dues during the appeal period.