2014 (9) TMI 853 - AT - Service Tax

Waiver of pre deposit - Valuation - scope of the term gross amount charged - Pre-amendment scenario i.e prior to 18-4-2006 - Commercial or industrial construction service - Held that - If the purpose of the 2006 amendments were reformatory i.e. removal of a mischief that resulted in a narrow or restricted enactment as to the value that amounts to a taxable value for computation of service tax, then on application of the mischief rule of statutory interpretation, we are required to consider the state of the legislation prior to the amendment; the apparent mischief that the prior legislation entailed; and the mischief that stood avoided by the subsequent amendment. If this interpretative principle were applied, it might be legitimate to derive assistance from the definition of the expression gross amount charged , post 18.04.2006 to the same expression occurring in the unamended Section 67(1), prior to 18.04.2006 as well. Whether this is the appropriate interpretative principle will however await the hearing of the appeal. It is possible that the expression gross amount charged might encompass non monetary consideration as well - Partial stay granted.

Summary

Issues involved:
1. Confirmation of service tax liability for commercial or industrial construction service.
2. Interpretation of the expression 'gross amount charged' under Section 67 of the Finance Act, 1994.
3. Applicability of the definition of 'gross amount charged' pre and post the amendment in 2006.

Issue 1:
The judgment dealt with the confirmation of service tax liability amounting to Rs. 10,24,695 for the provision of commercial or industrial construction service related to a cinema hall project in Jaipur. The appellant entered into an agreement with developers for construction work, received 8000 sq. ft. of built-up area as consideration, and later sold it to third parties. The revenue treated the income from the sale as taxable value for the construction service provided. The appellant failed to file returns and remit service tax, leading to the initiation of proceedings resulting in the impugned order by the Commissioner.

Issue 2:
The crux of the second issue revolved around the interpretation of the expression 'gross amount charged' under Section 67 of the Finance Act, 1994. The appellant contended that pre-amendment in 2006, the 'gross amount charged' referred to consideration received only in monetary terms for valuation of taxable services. Post-amendment, consideration received in any form, including composite consideration, was included for valuation. The argument focused on whether the 'gross amount charged' encompassed non-monetary considerations prior to the 2006 amendment.

Issue 3:
Regarding the applicability of the definition of 'gross amount charged' pre and post the 2006 amendment, the judgment discussed the legislative intent behind the amendment. The court considered whether the interpretative principle of the 'mischief rule' should apply to derive assistance from the post-amendment definition for interpreting the expression pre-amendment. The issue was deemed evenly balanced in favor of both the assessee and the Revenue, leading to the grant of waiver of pre-deposit and stay of further proceedings subject to the petitioner remitting 50% of the assessed liability within a specified timeline.

In conclusion, the judgment addressed the confirmation of service tax liability for a construction service, the interpretation of 'gross amount charged' under Section 67, and the applicability of the definition pre and post the 2006 amendment. The decision provided insights into the legislative intent behind the amendment and granted relief to the petitioner based on the circumstances of the case.