2015 (10) TMI 227 - AT - Service Tax

Waiver of pre-deposit of Service Tax - civil construction activities - Turn-Key Project - availing cenvat credit while availing benefit of abatement - Penalty u/s 78 & 77 - Held that - As per the Notification No. 01/2006-S.T., dated 1-3-2006, as was applicable during the relevant period, the services provided on Erection, Commissioning or Installation Services and Commercial or Industrial Construction , the services were leviable after allowing the abatement of 67% of the taxable value, subject to the condition that no Cenvat credit of Service Tax on Inputs or Capital Goods or Input Services used for providing such taxable service, had been taken under the provisions of Cenvat Credit Rules, 2004. It is not in dispute that the applicant had availed the credit in respect of the entire services. A lump-sum price was agreed upon for the total Project pertaining to the work of Commercial or Industrial Construction Service , he observed that as per Bills of Entry and shipping bills in the contract, it was agreed that the Notice would raise the bill for break-up of the contract price, phasewise and itemwise. The Bills of Entry/shipping bills of the contract did not have the provision for raising bills separately, showing the value for construction of roads, bridges, residential quarters, etc. In view of these facts, prima facie, we are not impressed with the contention of the applicant that the contract has a separate break-up for these services. In view of the rival claims put forward by the applicant and the Revenue, we find that their claim is required to be examined in detail, with reference to the terms of the contract, the books of account maintained by the applicant and the other evidences put forth by both the parties, which could be examined in detail, at the time of disposal of the appeal. However, in view of various facts of this case, enumerated as above, prima facie, at this stage, we are of the opinion that the applicant has not been able to make out a case for total waiver of the pre-deposit. - Partial stay granted.

Summary

Issues:
Application for waiver of pre-deposit of Service Tax, penalty, and interest under the Finance Act, 1994.

Analysis:
The applicant sought waiver of pre-deposit of Service Tax, penalty, and interest totaling &8377; 3,02,04,089/-. The main contention was related to the disallowance of abatement for civil construction activities under Notification No. 1/2006-S.T. The applicant argued that they had mistakenly availed abatement against civil construction services and had reversed part of the credit upon realization. Additionally, the applicant disputed the Service Tax demand on construction of roads, bridges, and residential quarters, claiming these services were not taxable. The demand on mobilization advances was also challenged as time-barred. On the other hand, the Revenue contended that the abatement availed by the applicant was in violation of the conditions of the notification and that Service Tax was applicable on the gross amount charged for the project, including construction services. The Revenue also highlighted the non-payment of Service Tax on mobilization advances received by the applicant.

The Tribunal observed that the applicant had entered into a Turn-Key Project contract subject to Notification No. 01/2006-S.T., allowing abatement for specific services. The applicant had availed credit for all services but claimed to have reversed it for abated services upon detection. The Revenue argued that the applicant had received a single contract and had taken Cenvat credit accordingly. The Tribunal noted discrepancies in the contract details and observed that the contract did not specify separate values for different services, indicating a lump-sum agreement for the entire project. The Tribunal was not convinced by the applicant's argument regarding separate break-up values for services like construction of roads and bridges. Regarding the mobilization advances, the Tribunal found conflicting claims between the applicant and the Revenue, necessitating a detailed examination during the appeal process. Consequently, the Tribunal directed the applicant to make a pre-deposit of &8377; 20.00 lakh within eight weeks, failing which the appeal would be dismissed.

In conclusion, the Tribunal's decision required the applicant to make a partial pre-deposit while allowing the appeal to proceed for further examination of the disputed issues related to Service Tax, penalty, and interest under the Finance Act, 1994.