2015 (1) TMI 1094 - AT - Service Tax

Waiver of pre deposit - Exemption under Notification No. 17/2005-S.T. - site formation and clearance excavation earth moving and demolition services - Held that - in respect of the services of excavation provided in respect of the Hydro-electric Dam Project being executed by M/s. L 3 crores in respect of service of site preparation provided to WBHIDC and hence while granting waiver from the requirement of pre-deposit Revenue s interests have to be safeguarded to this extent. - Partial stay granted.

Summary

Issues Involved:
1. Taxability of services provided to M/s. Larsen & Toubro Ltd. (L&T) and West Bengal Housing Infrastructure Development Corporation (WBHIDC).
2. Applicability of exemption under Notification No. 17/2005-S.T.
3. Invocation of extended period of limitation under Section 73(1) of the Finance Act, 1994.
4. Imposition of penalties under Sections 76, 77, and 78 of the Finance Act, 1994.
5. Requirement of pre-deposit for hearing the appeals.

Issue-wise Detailed Analysis:

1. Taxability of Services Provided to L&T and WBHIDC:
The appellant provided various taxable services, including site formation, excavation, and earthmoving for L&T's Hydro-electric dam project and site preparation for WBHIDC's housing complex. The Department contended that these services fall under "Site Formation and Clearance, Excavation and Earthmoving and Demolition Services" taxable under Section 65(105)(zzza) of the Finance Act, 1994. The appellant argued that the services provided to L&T were part of the construction of a Hydro-electric dam and should be exempt from Service Tax under Notification No. 17/2005-S.T. They also claimed that the services provided to WBHIDC involved dredging fish ponds, which should not be taxable.

2. Applicability of Exemption under Notification No. 17/2005-S.T.:
The appellant claimed exemption for the services provided to L&T under Notification No. 17/2005-S.T., which exempts services provided in the course of construction of dams, tunnels, roads, ports, etc. The Tribunal held that the excavation work for the Hydro-electric Power Generation Plant, being an essential part of the Hydro-electric dam, should be considered as in the course of construction of the dam and thus eligible for exemption under the said notification.

3. Invocation of Extended Period of Limitation under Section 73(1):
The Department issued four show cause notices invoking the extended period of limitation under Section 73(1) of the Finance Act, 1994, alleging suppression of facts by the appellant. The appellant argued that the demand for the period 1-4-2005 to 31-3-2007 was time-barred, citing the Supreme Court's judgment in Nizam Sugar Factory. The Tribunal found that the appellant had not disclosed the value of services provided to L&T and WBHIDC in their ST-3 Returns, justifying the invocation of the extended period. The Tribunal also noted that the Department discovered the non-payment of Service Tax during an audit in June 2010.

4. Imposition of Penalties under Sections 76, 77, and 78:
Penalties were imposed under Sections 76, 77, and 78 of the Finance Act, 1994. The Tribunal considered the appellant's plea for waiver of penalties, given their prima facie case for exemption under Notification No. 17/2005-S.T. for services provided to L&T. However, for services provided to WBHIDC, the Tribunal found no valid explanation for non-payment of Service Tax and upheld the penalties.

5. Requirement of Pre-deposit for Hearing the Appeals:
The Tribunal directed the appellant to deposit Rs. 3 crores within eight weeks to safeguard the Revenue's interests. Upon compliance, the requirement for pre-deposit of the balance amount of Service Tax, interest, and penalties would be waived, and recovery stayed until the disposal of the appeals.

Conclusion:
The Tribunal allowed the exemption for services provided to L&T under Notification No. 17/2005-S.T. but upheld the Service Tax liability for services provided to WBHIDC. The extended period of limitation was justified due to suppression of facts. The appellant was directed to make a pre-deposit of Rs. 3 crores for the appeals to be heard.