2014 (12) TMI 591 - AT - Service Tax

Waiver of pre deposit - Denial of benefit of exemption under Notification No.1/2006-ST dt. 01/03/2006 - completion and finishing services and commercial or industrial construction service - Held that - For the period after 01/06/2007 also, even if it is held that the service provided by the appellants amounts to completion and finishing service, the activity falls under the taxable service of works contract which provides for exclusion of value of materials and even during the subsequent period, the tax paid by the appellants would be more than what is due if it is classified under works contract service. Appellants have a prima facie case for complete waiver in view of the fact that the matter has been referred to 5 Member Bench; the appellants have paid more tax than what is due and there appears to be a prima facie case for classification of the service under works contract service. In view of the above, the requirement of predeposit is waived and stay against recovery is granted during the pendency of appeal. - Stay granted.

Issues:
1. Demand of service tax on completion and finishing services and commercial or industrial construction service.
2. Denial of benefit of exemption under Notification No.1/2006-ST dt. 01/03/2006.
3. Applicability of service tax on the activities undertaken by the Appellants.
4. Invocation of extended period of limitation under Section 73(1).
5. Imposition of penalties under Section 77 and 78.

Analysis:

Issue 1:
The Department demanded service tax on completion and finishing services and commercial or industrial construction service, denying the benefit of exemption under Notification No.1/2006-ST. The Department argued that the activities fell under taxable categories based on the Board's clarification. The Appellants contested this classification, stating their services were more appropriately classified as completion and finishing services. The Department also alleged suppression of information and intention to evade tax, justifying penalties.

Issue 2:
The Appellants contended that their activity involved erection of structures post-completion of construction, not falling under commercial or industrial construction service. They amended their service tax registration to comply with the law, availing abatement under Notification No.1/2006-ST. The Appellants argued that even if their service was considered completion and finishing service, it should be classified under works contract service, leading to overpayment of tax.

Issue 3:
The Appellants sought waiver of predeposit, citing a strong case due to the matter being referred to a 5 Member Bench. They argued that even if their service was deemed completion and finishing service, it should be classified under works contract service, justifying the waiver. The Tribunal found merit in the arguments, granting a stay against recovery during the appeal process.

Conclusion:
The judgment revolved around the classification of services provided by the Appellants, the applicability of service tax, and the denial of exemption under Notification No.1/2006-ST. The Tribunal considered the arguments presented by both parties and granted a waiver of predeposit, acknowledging a prima facie case for classification under works contract service. The decision provided relief to the Appellants during the pendency of the appeal, emphasizing the importance of proper classification and compliance with tax regulations.

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