2014 (1) TMI 721 - AT - Service Tax

Works Contract Service - Turnkey Contract - whether service provided to the Irrigation and CAD Department of Government of Andhra Pradesh are classifiable under the head works contract service - invocation of extended period of limitation - penalty imposable u/s 76, 77 & 78 - Held that - activities undertaken by the company in execution of turnkey project awarded by the State Government were classified as works contract service under Section 65(105)(zzzza) of the Act. The activities undertaken by the appellant are admittedly similar and the same are prima facie to be classified under the same heading. In other words, the appellant has no prima facie case against the impugned demand of service tax and the connected penalties - Following decision of Ramky Infrastructure Ltd., Satya Murthy, Maytas and Nagarjuna Construction Co. Ltd. Versus Commissioner of Service Tax 2012 (6) TMI 165 - CESTAT, Bangalore - Stay granted partly.

Summary

Issues: Application for waiver of pre-deposit and stay of recovery in a service tax case involving works contract service.

Analysis:

Issue 1: Classification of activity under 'works contract service' and demand of service tax

The appellant sought waiver of pre-deposit and stay of recovery for an amount demanded towards service tax and education cesses for a specific period related to a turnkey project involving laying of pipes and allied works. The Commissioner classified the activity under 'works contract service' as per Section 65(105)(zzzza) of the Finance Act, 1994, and imposed the demand along with interest and penalties. The Tribunal noted factual parity with a similar case and upheld the demand based on a precedent where activities under a contract were classified as 'works contract service.' The appellant argued against following the precedent due to an interim stay granted by the High Court in a related case. However, the Tribunal found no prima facie case against the demand, considering the similarity of activities and upheld the pre-deposit requirement.

Issue 2: Validity of stay order by the High Court and its impact on the case

The appellant contested the applicability of the Tribunal's previous decision based on an interim stay granted by the High Court in a related case. The Additional Commissioner argued that the stay order was ex parte and lacked a speaking order in favor of the appellant, citing precedents to support this stance. The Tribunal agreed with the Additional Commissioner, emphasizing that the absence of a prima facie view in favor of the appellant in the High Court's order did not warrant following it as a ratio. As a result, the Tribunal concluded that the appellant failed to establish a prima facie case against the demand and ordered a specific pre-deposit amount within a stipulated timeline.

Issue 3: Compliance and outcome

Given the lack of financial hardship for the appellant and the absence of a strong case against the demand, the Tribunal directed the appellant to pre-deposit a specific amount within a set timeframe. The appellant was required to report compliance to the Deputy Registrar by a specified date. Upon due compliance, the Tribunal granted a waiver of pre-deposit and stay of recovery for the remaining dues. The decision was pronounced in open court, emphasizing the importance of timely compliance with the Tribunal's directives.

This detailed analysis of the judgment highlights the key legal aspects, arguments presented, precedents considered, and the Tribunal's decision regarding the application for waiver of pre-deposit and stay of recovery in a service tax case involving works contract service.