2014 (1) TMI 1254 - AT - Service Tax

Waiver of pre-deposit of service tax - Commercial or Industrial Construction Service - Repair and renovation of office premises/commercial premises - Benefit of Notification No.1/2006-ST dated 1.3.2006 - Held that - applicants are undertaking renovation and alteration of the existing building such as banks and call centres. There is no evidence on record that the applicants have undertaken any activity of completion or finishing as provided under clause (c) of the scope of commercial construction service. The activity undertaken by the applicants comes under clause (d) of commercial construction service. Therefore, prima facie, the applicants have made out a strong case in their favour. Therefore, pre-deposit of the dues adjudged is waived and recovery thereof is stayed during the pendency of the appeal - Stay granted.

Summary

Issues:
Waiver of pre-deposit of service tax under 'Commercial or Industrial Construction Service' category, denial of benefit of Notification No.1/2006-ST, inclusion of value of furniture in taxable value, contention regarding completion and finishing services, interpretation of scope of industrial construction services.

Analysis:
The case involved an application for waiver of pre-deposit of service tax amounting to Rs. 4,31,01,251/- along with interest or penalty by applicants registered under the 'Commercial or Industrial Construction Service' category. The applicants, engaged in repair and renovation of office/commercial premises, claimed the benefit of Notification No.1/2006-ST dated 1.3.2006. However, the adjudicating authority denied this benefit and included the value of furniture supplied by the applicants in the taxable value of their services.

The primary contention put forth by the applicants was that they were liable to pay service tax on 33% of the gross value of the taxable service as per the said Notification. They argued that the denial of the benefit was unjustified as they were involved in repairing and renovating existing buildings such as call-centers and banks, falling under the scope of 'repair, alteration, renovation, and restoration' services rather than completion and finishing services related to buildings or civil structures.

On the other hand, the Revenue contended that the applicants had indeed provided completion and finishing services, thus rendering them ineligible for the Notification's benefit. However, upon examination, the Tribunal found that during the relevant period, the applicants were primarily engaged in renovation and alteration of existing buildings like banks and call centers, activities falling within the scope of 'repair, alteration, renovation, and restoration' services as per the Finance Bill 2005.

Consequently, the Tribunal concluded that there was no evidence to suggest that the applicants had undertaken completion or finishing activities falling under the commercial construction service category. Instead, their activities aligned more closely with the 'repair, alteration, renovation, and restoration' services under industrial construction. Therefore, the Tribunal ruled in favor of the applicants, waiving the pre-deposit of dues adjudged and staying the recovery during the appeal's pendency. The stay petition was allowed, providing relief to the applicants.