2015 (5) TMI 947 - AT - Service Tax

Waiver of pre deposit - consulting engineering services - Service provided in SEZ - Held that - It is the case of export of service outside India as the applicants has provided services to the service recipient located outside India. Further for the project of Debhol Restart, they have discharged the service tax liability. For the project namely, JERP, the unit is located in SEZ and for the project KG-D 6 the unit is located outside the territory of India. In these circumstances, applicant has made out a case for complete waiver of requirement of pre-deposit. Consequently amount already deposited by the appellant is sufficient for compliance with the provisions of Section 35 F of Central Excise Act, 1944 read with Section 83 of Finance Act, 1994, for waiver of requirement of pre-deposit of service tax, interest and penalties. Consequently, we waive the requirement of pre-deposit of balance amount of Service Tax, interest and penalties and stay recovery thereof during pendency of the appeals. - Stay granted.

Summary

Issues:
1. Stay application for early hearing of stay application
2. Waiver of demand of service tax along with interest and penalty for consulting engineering services provided to a foreign recipient
3. Applicability of service tax on projects executed in India, SEZ, and outside the territory of India

Analysis:
1. The judgment addressed the issue of a stay application for early hearing, which was dismissed as infructous since the stay application was listed on the same day.
2. The applicant sought a waiver of demand amounting to Rs. 2,22,70,103/- along with interest and penalty for providing consulting engineering services to a foreign recipient. The applicant had already paid a portion of the demanded amount towards service tax and interest.
3. The case involved the contention that the services provided qualified as export of service, citing precedents like Paul Merchants and Microsoft. The applicant argued that service tax was not applicable based on the nature of the projects, including one executed in an SEZ and another outside the territory of India. The opposing argument referred to a CBEC Circular stating that for export of service, the service must be performed outside India.
4. After hearing both parties, the Tribunal found that the services provided by the applicant constituted export of service outside India, as they were provided to a recipient located outside India. The Tribunal noted that the applicant had already paid the service tax liability for one project and that the projects in SEZ and outside India did not attract service tax liability. As a result, the Tribunal granted a complete waiver of the pre-deposit requirement for the remaining service tax, interest, and penalties. The Tribunal also stayed the recovery of the balance amount during the pendency of the appeals.

This detailed analysis of the judgment highlights the issues of the stay application, waiver of demand for service tax, and the applicability of service tax on different project scenarios, providing a comprehensive understanding of the Tribunal's decision.