2014 (8) TMI 669 - AT - Service Tax

Demand of service tax - Erection, Commissioning and Installation Services - Held that - All the activities undertaken by the applicants can be identified separately. Therefore, following the decision in the case of Commissioner of Central Excise, Raipur v. BSBK Pvt. Ltd. reported in 2010 (5) TMI 46 - CESTAT, NEW DELHI - LB , wherein this Tribunal has held that when the activities undertaken by the applicants are identifiable separately, then, the whole of the activity cannot be termed as composite contract . In the instant case also, the activities undertaken by the appellants can be identified separately, therefore, following the decision in the case of BSBK Pvt. Ltd. (supra), we find that the applicants have made out a prima facie case for 100% waiver of service tax, interest and penalty. Accordingly, we waive the requirement of pre-deposit of the entire amount of service tax, interest and penalty and stay recovery thereof during the pendency of the appeal - Stay granted.

Summary

Issues:
Confirmation of demand for service tax, interest, and penalties under the category of "Erection, Commissioning and Installation Services" for setting up a power plant.

Analysis:
The appellants contended that they were engaged in both "Construction of Civil Work" and "Erection, Commissioning and Installation Services" for setting up the power plant. They argued that they outsourced the "Civil Work" and did not take any Cenvat credit for it, while for the "Commissioning and Installation" activity, they took Cenvat credit and discharged their service tax liability without claiming certain exemption notifications.

The Revenue argued that the entire activity constituted a "composite contract" for "Erection, Commissioning and Installation" of the power plant, and since the appellants availed Cenvat credit for input services/capital goods, they were not entitled to the benefit of certain exemption notifications. The Revenue also contended that the activity fell under "Erection, Commissioning and Installation Services."

After hearing both sides and examining the records, the Tribunal found that the activities undertaken by the appellants could be identified separately. Citing a previous decision, the Tribunal held that when activities can be identified separately, the entire activity cannot be considered a "composite contract." Therefore, the Tribunal concluded that the appellants had made out a prima facie case for a 100% waiver of service tax, interest, and penalty. As a result, the Tribunal waived the requirement of pre-deposit of the entire amount and stayed the recovery during the appeal's pendency.