2013 (12) TMI 210 - AT - Service Tax

Stay application - Waiver of pre deposit - erection, commissioning and installation service - Held that - there are two separate agreements with the MEPL. One is for supply of material and other is for erection, commissioning and installation service. Applicant had paid the appropriate service tax on erection commissioning service. Revenue wants to adding the value of material supplied for the purpose of service tax. We find that the supply of material is under a separate agreement and applicant paid Vat/Sales tax - applicant had undertaken the activity for railway line at railway siding. As per the Finance Act, Railways are not covered under the construction service. Further as per the Indian Railway Act 1989, siding is a part of railway - applicant has taken the activity of sinking of shaft of mines much before the mining services became taxable. In view of the above facts and circumstances of the case, the pre-deposit of dues are waived and recovery of the same is stayed during the pendency of appeal - Prima facie case in favour of assessee - Stay granted.

Issues:
1. Waiver of pre-deposit of service tax, interest, and penalties.
2. Tax liability on erection, commissioning, and installation services.
3. Taxability of shifting transmission lines for road widening.
4. Tax liability on construction services for railway and railway siding.
5. Taxability under site formation and clearance, excavation, and earth moving services.
6. Benefit of Notification No. 12/2003-ST regarding credit availed on duty paid goods.

Analysis:
1. The applicant sought waiver of pre-deposit of service tax, interest, and penalties amounting to Rs.28,48,55,027. The demand was confirmed for activities related to erection, commissioning, and installation services. The applicant argued that separate contracts were in place for material supply and services, and appropriate taxes were paid accordingly. The Tribunal found merit in the applicant's case, noting that the material supply was covered by a separate agreement, and VAT/sales tax was duly paid. The demand was deemed unsustainable as the value of material supplied could not be considered for service tax on erection and commissioning activities under a distinct agreement.

2. A demand of Rs.1,21,66,560 was confirmed for activities involving shifting transmission lines for road widening. The applicant relied on a Board Circular stating that such activities were not taxable under the Finance Act. The Tribunal agreed with the applicant, emphasizing that the shifting of overhead cables/wires for road widening did not fall under taxable services, rendering the demand unsustainable.

3. Another demand of Rs.4,81,96,016 was confirmed for construction services related to railways and railway siding. The applicant contended that railway services were excluded from construction services under the Finance Act. Additionally, siding was considered part of the railway as per the Railway Act, 1989. The Tribunal supported the applicant's argument, stating that the demand was not sustainable due to the exclusion of railway services from construction services.

4. A demand of Rs.13,88,878 was confirmed for services falling under site formation, clearance, excavation, and earth moving. The applicant engaged in sinking shafts, which were considered pre-mining activities. The demand was challenged on the grounds that the activity predated the taxable period for mining services. The Tribunal agreed with the applicant, finding the demand unsustainable given the timeline of the activity.

5. The Revenue contended that the applicant failed to demonstrate non-availment of credit on duty paid goods related to erection and commissioning services. The benefit of Notification No. 12/2003-ST was denied based on this premise. The Tribunal noted the separate agreements for material supply and services, emphasizing that the applicant had a strong case in their favor. The Tribunal granted the waiver of pre-deposit and stayed the recovery during the appeal process, acknowledging the merits of the applicant's arguments across various tax liability issues.

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