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2014 (1) TMI 1416 - AT - Service TaxActivity of providing and laying spiral welded/fabricated M.S. pipeline - Erection, Commissioning or Installation Services - Held that - applicants main activity is laying pipeline for irrigation purposes. Prima facie we are of the view that the activity of laying of pipelines falls under the Works Contract Service and the same has been excluded from the taxable services vide Board s Circular No. 116/10/2009-S.T. cited herein above. Therefore, the applicants have made out a prima facie case for waiver of 100% of Service Tax, interest and penalties. Accordingly, we waive the requirement of pre-deposit of the entire amount of service tax, interest and penalties and stay recovery thereof during the pendency of the appeal - Stay granted.
Issues:
Classification of services provided by the applicants under 'Erection, Commissioning or Installation Services' or 'Works Contract Service'. Validity of demand of Rs. 2,66,31,150/- along with interest and penalties under the Finance Act, 1994. Request for waiver of pre-deposit of the entire demand by the applicants. Classification of Services: The case involved a dispute over the classification of services provided by the applicants as either 'Erection, Commissioning or Installation Services' or 'Works Contract Service'. The department contended that the activities fell under the former category, leading to a demand of Rs. 2,66,31,150/- along with interest and penalties. The applicants argued that their main activity was laying pipelines for irrigation purposes, which should be classified as 'Works Contract Service' based on a circular issued by the Board. The Tribunal, after considering the submissions and records, found that the applicants' primary activity indeed fell under 'Works Contract Service'. The Tribunal noted that the laying of pipelines for irrigation could be classified as such, and the Board's Circular No. 116/10/2009-S.T. supported this exclusion from taxable services. Consequently, the Tribunal held that the applicants had a prima facie case for waiver of 100% of Service Tax, interest, and penalties. Validity of Demand: The demand of Rs. 2,66,31,150/- along with interest and penalties under the Finance Act, 1994, was challenged by the applicants. They sought a waiver of pre-deposit of the entire demand through a stay application. The Tribunal, upon examining the nature of the activities undertaken by the applicants, found that the demand was not sustainable in the eyes of the law. Given that the primary activity of laying pipelines for irrigation fell under 'Works Contract Service' as per the Board's circular, the Tribunal concluded that the demand was unfounded. Consequently, the Tribunal waived the requirement of pre-deposit of the entire amount of service tax, interest, and penalties, and stayed the recovery of the same during the pendency of the appeal. In conclusion, the Appellate Tribunal CESTAT MUMBAI ruled in favor of the applicants, holding that their services were appropriately classifiable under 'Works Contract Service' as opposed to 'Erection, Commissioning or Installation Services'. The Tribunal granted a waiver of 100% of the Service Tax, interest, and penalties demanded, citing the exclusion of the activity from taxable services per the relevant circular. The decision allowed the applicants to proceed with the appeal without the need for pre-deposit of the disputed amount.
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