2014 (9) TMI 816 - AT - Service Tax

Waiver of predeposit - Works contract services - lift irrigation schemes - Held that - An amount of ₹ 20,09,246/- out of the total demand confirmed is attributable to consideration received on works contract services provided in respect of Rajiv Sagar Lift Irrigation Project. The petitioner s claim for exemption on this aspect predicated on the basis of exemption Notification No. 41/2009-S.T., was rejected by the adjudicating authority on the ground that lift irrigation schemes are outside the purview of canals which are the subject matter of Notification No. 41/2009-S.T. - Works contract works undertaken in relation to canals would include pump houses and other facilities erected for lifting the water from lower to higher level of the canals, as would be the case in lift irrigation projects. For reasons alike as recorded in the interim order of this Tribunal dated 1-10-2013, we find a strong prima facie case in favour of the appellant/petitioner for waiver of the demand of ₹ 20,09,246. Effective date of notification - Held that - It is axiomatic that an exemption Notification issued under Section 93(1) has no retrospective operation or reach. In the circumstances, we are not pursuaded, prima facie, that service provided prior to 23-10-2009, the date of Notification No. 41/2009-S.T. are immune to the levy of service tax on the mere circumstance that the consideration for the earlier provided service was received after the date of issue of this Notification. - stay granted partly.

Summary

Issues:
1. Waiver of predeposit and stay of proceedings for realization of service tax, interest, and penalties.
2. Availability of exemption under Notification No. 41/2009-S.T. for services provided before the date of the notification.
3. Exemption for works contract services related to lift irrigation projects.
4. Dispute regarding the valuation of service tax based on consideration received.

Analysis:

Issue 1: Waiver of Predeposit and Stay of Proceedings
The appellant sought waiver of predeposit and stay of further proceedings regarding the demand of service tax, interest, and penalties confirmed by the adjudication order. The Tribunal granted the waiver on the condition that a specific amount be remitted within a stipulated time frame to avoid dismissal of the appeal.

Issue 2: Exemption under Notification No. 41/2009-S.T.
The appellant contended that the benefit of exemption should apply even if services were provided before the notification date but the consideration was received after. However, the Tribunal disagreed, emphasizing that exemption notifications do not have retrospective operation. The exemption halts the levy of tax from the date of issuance, and services provided before the notification are not immune to service tax solely based on consideration received post-notification.

Issue 3: Exemption for Works Contract Services in Lift Irrigation Projects
A portion of the demand was related to works contract services for a lift irrigation project. The appellant's claim for exemption under Notification No. 41/2009-S.T. was rejected. The Tribunal, referencing previous interim orders, found a strong case for exemption, stating that works related to lift irrigation projects could be considered within the scope of canals mentioned in the notification.

Issue 4: Valuation Dispute
The appellant argued that the demand was based on total values in bills, not reflecting the actual consideration received. However, as no detailed analysis or dispute on valuation was presented earlier, the Tribunal did not delve into this matter at that stage of the proceedings.

In conclusion, the Tribunal granted waiver of predeposit and stay of proceedings, clarified the limited scope of exemption notifications, acknowledged a potential exemption for works related to lift irrigation projects, and refrained from addressing the valuation dispute due to lack of prior contention.