2013 (12) TMI 1380 - AT - Service Tax

Stay application - Commercial and Industrial Construction services - Interpretation of provisions of Rule 3(3) of the Works Contract (Composition Scheme for payment of Service Tax) Rules, 2007 - Held that - an assessee is eligible to opt for the Service Tax only if he exercises an option prior to payment of Service Tax on the works contract - appellant had followed the said procedure. Be that as it may, we also find strong force in the contentions raised by the ld.Counsel that if the Revenue authorities want to tax the services under Commercial or Industrial Construction services, they are eligible for abatement of 67% of the value which has been charged and collected by them - Stay granted.

Summary

Issues: Interpretation of Rule 3(3) of Works Contract Composition Rules, Benefit of abatement under Commercial and Industrial Construction services, Waiver of pre-deposit of Service Tax, Interest, and Penalties

In this case, the appellant filed a Stay Petition seeking waiver of pre-deposit of Service Tax, interest, and penalties amounting to Rs.13,56,199. The adjudicating authority and the first appellate authority confirmed the amounts due, stating that the appellant had not discharged the Service Tax liability under Commercial and Industrial Construction services. The appellant argued that they had treated the construction contract as a Works Contract, paid VAT on it, and later registered under Works Contract for Service Tax, opting for the Composite scheme and paying the entire liability. The appellant also claimed the benefit of abatement of 67% under Commercial and Industrial Construction services, reducing their liability to Rs.4.50 lakhs, of which they had already deposited Rs.3.68 lakhs.

The main issue revolved around the interpretation of Rule 3(3) of the Works Contract Composition Rules, 2007. The Tribunal found that the appellant had followed the procedure required by the rule, allowing them to opt for Service Tax under Works Contract. Additionally, the Tribunal acknowledged the appellant's argument for abatement under Commercial and Industrial Construction services, reducing their liability significantly. The Tribunal considered the deposit made by the appellant as sufficient security to hear and dispose of the appeal, ultimately allowing the application for waiver of pre-deposit of the remaining balance and staying the recovery until the appeal's conclusion.

In conclusion, the Tribunal's judgment focused on the correct interpretation of the relevant rules governing Service Tax liability under Works Contract and Commercial and Industrial Construction services. The decision provided relief to the appellant by granting the waiver of pre-deposit and staying the recovery process, considering the appellant's compliance with the rules and the deposit made as security.