2014 (3) TMI 862 - AT - Service Tax

Waiver of pre deposit - notification 15/2004-ST - abatement of 67% of the gross value received - revenue denied the abatement on the ground that finishing service is not eligible for abatement - Held that - in the first paragraph of SCN itself, it is mentioned that applicant is engaged in fabrication and erection of items viz. sliding gates and rolling shutters. Therefore, prima facie, the finding in the adjudication order that they were doing construction activity appears to be not proper. Further, the argument that for claiming exemption Notification No.12/03-ST dt. 20.6.03, the value of goods should be shown separately in the invoice is specified in the notification. The condition given in the notification is that there is documentary proof specifically indicating the value of the said goods and materials . The reason to reject VAT returns as a valid proof is not specified by the lower authorities. Therefore, we find merit on both the issues raised by the applicant. We are of view that this appeal should be admitted without any pre-deposit - Stay granted.

Summary

Issues Involved:
Classification of services under 'Construction Service' or 'Erection and Commissioning Service'; Applicability of abatement under Notification No. 15/2004-ST; Eligibility for deduction in the value of materials sold; Admissibility of appeal without pre-deposit.

Detailed Analysis:

1. Classification of Services: The applicant was engaged in the fabrication of sliding gates and rolling shutters, along with providing the service of erection of these items. The Revenue contended that the service provided by the applicant fell under 'finishing services,' classifiable as construction of a complex. The applicant argued that the service was actually 'erection and commissioning,' which should be classified differently. The Tribunal noted that the applicant's activities primarily involved fabrication and erection, indicating that the construction activity classification might not be appropriate.

2. Abatement under Notification No. 15/2004-ST: The applicant availed abatement of 67% of the gross value received for the services provided, including the material value, as per Notification No. 15/2004-ST. The Revenue sought to deny this abatement, leading to a show cause notice and subsequent confirmation of dues against the applicant. The Tribunal found merit in the applicant's argument that abatement should be available for the service of erection and commissioning as well, supporting the applicant's position.

3. Deduction in Value of Materials Sold: The applicant claimed that the service involved the supply of materials, making them eligible for a deduction in the value of materials sold during the service provision. They produced VAT returns as evidence of material sales, but the lower authorities did not address this point. The Tribunal found that the lower authorities did not specify a valid reason for rejecting the VAT returns as proof, indicating a lack of proper consideration of this aspect.

4. Admissibility of Appeal without Pre-deposit: The applicant filed an appeal against the order, seeking admission without any pre-deposit. The Revenue opposed this request, citing the classification of services and the lack of clarity regarding the value of materials sold in the invoices. However, the Tribunal, after considering arguments from both sides, found merit in the issues raised by the applicant. Consequently, the Tribunal admitted the appeal without any pre-deposit and ordered a stay on the collection of dues pending the appeal process.

In conclusion, the Tribunal's judgment addressed the classification of services, the applicability of abatement, the eligibility for deduction in the value of materials sold, and the admissibility of the appeal without pre-deposit. The decision favored the applicant on various grounds, highlighting the need for proper consideration of classification and supporting documentation in such cases.