2014 (1) TMI 1373 - AT - Service Tax

Waiver of pre-deposit of Service Tax - Penalties under Sections 76 and 77 - Works Contract - Held that - appellant is laying sewerage/drainage pipe-line for Ahmedabad Municipal Corporation or Ahmedabad Urban Development Authority. The adjudicating authority has held that these two organizations are not established solely for sanitation and are also engaged in the trade and commerce - appellant has made out a prima facie case for waiver of the pre-deposit of the amounts involved - Stay granted.

Summary

Issues:
Waiver of pre-deposit of Service Tax, interest, and penalties under Sections 76 and 77 of Finance Act, 1994 based on the classification of works contract for laying pipelines or conduit.

Analysis:
The Stay Petition sought waiver of pre-deposit of Service Tax, interest, and penalties amounting to Rs. 70,96,205/-, confirmed by the adjudicating authority under the category of Works Contract for laying pipelines. The appellant argued in favor of waiver, citing the Board's Circular dated 15-9-2009 and a Tribunal decision supporting their position.

The appellant contended that the pipelines laid were for inter-connection of storm water drainage pipeline, aligning with the Board's Circular and a relevant Tribunal decision. The Departmental Representative (D.R.) reiterated the adjudicating authority's findings, opposing the waiver request.

Upon thorough evaluation of both sides' submissions, the Tribunal noted that the appellant was laying sewerage/drainage pipelines for government entities. The adjudicating authority's view that these entities were not solely for sanitation but also engaged in trade and commerce was disputed. The Tribunal referred to the Board's Circular emphasizing that construction services for commercial or industrial purposes are taxable, especially if developed for revenue generation by private agencies.

Consequently, the Tribunal found that the appellant established a prima facie case for waiving the pre-deposit amounts. Therefore, the application for waiver was granted, and the recovery of the said amounts was stayed until the appeal's final disposal. The decision was dictated and pronounced in court by the Tribunal members.