2014 (11) TMI 628 - AT - Service Tax

Construction of industrial or commercial complex service - demand of service tax with penalties - Held that - There is a small demand of amount of ₹ 1,11,389/- under the head construction of industrial or commercial complex service. appellant could not produce any proof that service had been rendered prior to 2005-06. It was submitted that it was for the Department to show that the service was rendered after 2005-06 and was liable to tax. However, in view of the fact that the amount involved is small, he would not like to contest the same and would prefer to save the time of the Tribunal to hear other appeals. Under these circumstances we accept the offer to make the payment of service tax and interest on this service and allow the request for waiver of penalties by invoking provision of Section 80 of the Finance Act, 1994. In this case, even though amount was received in 2005-06, the service became liable to tax from 2005-06 and being a new service, there is a possibility of confusion in the minds of assessees. demand of service tax with interest and penalty imposed in respect of residential complex service is set aside. The demand for service tax and interest in respect of commercial or industrial complex rendered for HSBC is upheld. The penalties imposed under all relevant statutory provisions of Finance Act, 1994 are set aside - Decided in favour of assessee.

Issues:
1. Dismissal of appeal and stay application due to unexplained delay.
2. Challenge of the order before the High Court.
3. Demand of service tax for residential complex service.
4. Liability for payment of service tax prior to a specific date.
5. Interpretation of construction agreements for residential complex service.
6. Applicability of service tax on construction of individual apartments.
7. Demand of service tax for construction of industrial or commercial complex service.
8. Waiver of penalties under Section 80 of the Finance Act, 1994.

Issue 1:
The appeal and stay application were dismissed by the Tribunal due to a delay of 414 days not being satisfactorily explained by the appellants, leading to the dismissal in Final Order No.26595/2013.

Issue 2:
The appellants challenged the Tribunal's order before the High Court, which directed them to deposit the entire duty amount. The High Court instructed the Tribunal to hear the appeal within three months, making the stay application infructuous.

Issue 3:
A total demand of service tax of Rs. 45,14,185 with interest was imposed for the period 2005-06 to 2007-08, along with a penalty under Section 78 for residential complex service.

Issue 4:
The appellants argued that there was no liability for service tax on residential complex service before a specific date, citing legal clarifications and interpretations regarding the liability for tax on construction agreements.

Issue 5:
The Tribunal considered various decisions favoring the appellants' position, including the construction of individual apartments not constituting a residential complex service, ultimately setting aside the demand for service tax and penalties for residential complex service.

Issue 6:
Regarding a small demand for construction of industrial or commercial complex service, the appellants offered to pay the tax and interest, seeking waiver of penalties under Section 80 of the Finance Act, 1994, which was accepted by the Tribunal due to the small amount involved and the possibility of confusion regarding the tax liability.

Issue 7:
The demand for service tax and interest for commercial or industrial complex service was upheld, while penalties under relevant statutory provisions were set aside, resulting in the appeal being disposed of accordingly.

This detailed analysis covers the dismissal of the appeal, challenges before the High Court, demands of service tax for different services, liability interpretations, legal clarifications, waiver of penalties, and the final decision of the Tribunal on each issue.

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