2014 (1) TMI 97 - AT - Service Tax

Demand of service tax - Manufacture/sale and erection, commissioning, installation and maintenance of Wind Energy Generators (WEG) - Held that - Tribunal in the applicant s own case granted unconditional stay on the issue of NOC charges paid to Tamil Nadu Electricity Board. However, the demand of tax on land development charges, we find that stay was granted on the ground that classification was not done correctly. In the present case, while demanding tax on land development charges, value of land should not form part of the taxable service of erection, commissioning or installation service. Therefore, the demand of tax on the entire value, prima facie, is not sustainable - Partial stay granted.

Summary

Issues:
1. Taxability of No Objection Certificate (NOC) charges and Land Development Charges in connection with Wind Energy Generators (WEG).
2. Validity of demand for tax on NOC charges and Land Development Charges.
3. Financial hardship plea by the applicant-company.

Analysis:
1. The judgment deals with the taxability of charges related to the supply, erection, commissioning, and installation of Wind Energy Generators (WEG). The applicants collected No Objection Certificate charges and Land Development Charges during these processes, which were alleged to be not included in the taxable value. The adjudicating authority confirmed a demand of Rs.7,15,67,704/- along with interest and penalty.

2. The applicant's counsel argued that the NOC charges paid to the Electricity Board were not related to the services provided and cited a Tribunal stay order in the applicant's favor. Additionally, the counsel contended that the Land Development Charges had no nexus with the services rendered for erection, commissioning, or installation. The Commissioner's reliance on a previous case was challenged, citing financial hardship due to significant losses incurred by the applicant-company.

3. The Assistant Commissioner objected to waiving the pre-deposit on Land Development Charges, emphasizing the distinction between land sale and land development. The applicant's engagement in land development activities related to the installation, erection, and commissioning was highlighted to support the tax demand.

4. The Tribunal found merit in the applicant's arguments regarding the NOC charges and the incorrect classification of land development charges. While granting unconditional stay on the NOC charges, the Tribunal determined that the tax demand on land development charges, including the value of land, was not sustainable. Considering the prima facie case and the financial hardship faced by the applicant, the Tribunal directed a deposit of Rs. 20,00,000/- within six weeks, with the waiver of the balance tax amount, interest, and penalty during the appeal's pendency.

This detailed analysis of the judgment provides a comprehensive understanding of the issues raised, arguments presented, and the Tribunal's decision regarding the taxability of charges related to Wind Energy Generators and the financial implications for the applicant-company.