2014 (11) TMI 124 - AT - Service Tax

Waiver of pre deposit - Works contract service - they had executed the contract as a sub-contractor - construction of pump houses, storage tanks and distribution of water supply network - Held that - On going through the contract and the nature of work carried out by the appellant and having regard to the fact that appellants got to do only a portion of the contract entrusted to M/s. Ramkey Infrastructure Ltd., which is in reality a turnkey project, it cannot be said that the appellants have also executed an EPC project when they have undertaken this work. Prima facie, we feel that the appellant have a case on merits. Accordingly, in our opinion, the amount already deposited by the appellant is sufficient for hearing the appeal and accordingly there shall be waiver of pre-deposit and stay against recovery of balance dues during the pendency of appeal - Stay granted.

Summary

Issues:
1. Demand under Goods Transport Service (GTA)
2. Demand under Works Contract Service

Analysis:

Issue 1: Demand under Goods Transport Service (GTA)
The case involved a demand of &8377; 1,27,541/- under the category of Goods Transport Service (GTA). The appellant had already paid the entire amount with interest before the issue of the show cause notice. The payment was made on 22-6-2011, and intimation was given on 4-7-2011. The Tribunal acknowledged the payment made by the appellant before the issuance of the notice, indicating compliance with the financial obligation. Therefore, the Tribunal found the amount already deposited by the appellant to be sufficient for hearing the appeal. As a result, the Tribunal decided in favor of the appellant, granting a waiver of pre-deposit and stay against the recovery of any balance dues during the pendency of the appeal.

Issue 2: Demand under Works Contract Service
The second demand in the case amounted to &8377; 11,30,738/-. The appellant claimed that they had executed the contract as a sub-contractor, with the work being entrusted to them on a back-to-back basis by the main contractor, M/s. Ramkey Infrastructure Ltd. The nature of the work involved the construction of pump houses, storage tanks, and the distribution of water supply network. The Revenue contended that the work executed by the appellant could be considered as a turnkey project falling under clause (e) of the definition of 'Works Contract'. However, the appellant argued that they should be covered by clause (b) of Explanation (2) of 'Works Contract Service', which pertains to the construction of a new building, civil construction, or a pipeline primarily for commerce or industry. After examining the contract and the work carried out by the appellant, the Tribunal noted that the appellant had undertaken only a portion of the contract entrusted to the main contractor, which was essentially a turnkey project. The Tribunal opined that the appellant did not execute an EPC project based on the work they performed. Consequently, the Tribunal found merit in the appellant's case and determined that the amount already deposited was sufficient for the appeal. Therefore, the Tribunal granted a waiver of pre-deposit and a stay against the recovery of any remaining dues during the appeal's pendency.