2014 (5) TMI 501 - AT - Service Tax

Waiver of pre-deposit of Service Tax - Penalty u/s 78 - erection, commissioning and installation services - abatement of 67 % as allowed under Notification No. 19/2003 ST - Held that - Appellant undisputedly registered with the Service Tax department for erection, commissioning and installation services from 11.04.2005. Also on going through the ST 3 returns we find that they have not claimed the abatement of 67 % as allowed under Notification No. 19/2003 ST - unless the said exemption is claimed and necessary conditions laid down therein are fulfilled by the applicant its benefit cannot be extended to them. Further we find that the period involved in the present case is 2005 - 2006, 2006 2007 and 2007 2008. Service Tax on works contract was levied w.e.f 01.06.2007 hence majority of the period was covered under the erection, commissioning and installation services for which the applicant / appellant was registered w.e.f April, 2005. Prima facie we find that the applicant are not entitled to the benefit of abatement of 67 % allowed under Notification No. 19/2003 ST as the same was not claimed and fulfillment of the conditions could not be verified by the lower authority. Thus the applicant could not able to make a prima facie case for waiver of entire amount of Service Tax and penalty imposed - Conditional stay granted.

Summary

Issues Involved:
Application for waiver of pre-deposit of Service Tax and penalty under section 78 of the Finance Act, 1994.

Analysis:
1. The case involved an application for waiver of pre-deposit of Service Tax amounting to Rs. 1,63,14,087/- and equivalent penalty imposed under section 78 of the Finance Act, 1994. The applicant/appellant was registered for providing erection, commissioning, and installation services. The Revenue alleged that there was a shortfall in the Service Tax payment during the financial years 2005-2008 based on the audited balance sheet. The Commissioner issued a show cause notice, and subsequently, penalty was imposed.

2. The consultant for the appellant argued that the services provided were part of a composite contract involving both material supply and services, falling under the scope of works contract. He contended that the Service Tax liability should be reduced by allowing the abatement of 67% as per relevant notifications. However, the consultant failed to provide supporting documents for the claimed financial hardship.

3. On the other hand, the Additional Commissioner argued that the appellant had not claimed the abatement in their returns as per the notifications. The Tribunal noted that the appellant was registered for the services in question from April 2005 and had not availed the abatement benefit in their returns. The Tribunal agreed that without claiming the exemption and fulfilling the conditions, the benefit cannot be extended. As the majority of the period in question was covered under the registered services, the appellant was not entitled to the abatement benefit.

4. After hearing both sides, the Tribunal found that the appellant did not establish a prima facie case for waiving the entire Service Tax amount and penalty. Citing legal principles, the Tribunal directed the appellant to make a pre-deposit of 25% of the Service Tax amount within eight weeks. Failure to comply would result in the dismissal of the appeal without further notice, while compliance would lead to the waiver of the balance amount of Service Tax and penalty with recovery stayed during the appeal's pendency.