2015 (11) TMI 472 - AT - Service Tax

Waiver fo pre deposit - Consulting Engineer s Services - exemption from service tax under Notification No.45/2010/ST dated 20.07.2010 - Bar of limitation - Held that - Proportionate cost of existing infrastructure, which has been separately shown and collected in the respective invoices along with supervision charges, cannot be considered as taxable service under the category of Consulting Engineer s Services . Thus, on this count, the Applicant could able to make out a prima-facie case for total waiver of predeposit of service tax demand. Regarding confirmation of demand on the credit availed on input services, namely, security and telephone services, we are not impressed with the argument of the ld.Advocate for the Applicant. The Applicants are rendering both the taxable and non-taxable service, hence it is difficult to appreciate that the security and telephone services, are rendered in connection with only the taxable output services i.e. Consulting Engineer s Service. Prima-facie, on going through the impugned order, we find that the ld. Commissioner was not convinced with the evidences placed before him and rejected the claim of the Applicant that these input service are used in rendering the taxable service. - Considering, the Applicant is a Public Sector Undertaking and also keeping in view the interest of Revenue, it would be appropriate, at this stage, to direct the Applicant to deposit ₹ 5.00 lakhs - Partial stay granted.

Summary

Issues: Application for waiver of predeposit of service tax, cenvat credit, and penalty under the Finance Act, 1994.

In this judgment by the Appellate Tribunal CESTAT KOLKATA, the Applicant, a Govt. of Odisah Undertaking, sought waiver of predeposit of service tax, cenvat credit, and penalty totaling significant amounts. The Applicant was engaged in providing 'transmission of electricity service' and supervision services classified under "Consulting Engineer's Services." The ld.Advocate for the Applicant argued that while transmission of electricity services were exempt from service tax, supervision charges under Consulting Engineer's Services were taxed. The ld.Advocate contended that the infrastructure cost included in the supervision charges should not be taxable under Consulting Engineer's Services as it was separately shown in invoices and not connected to the supervision charges. The ld.Advocate also argued that the cenvat credit demand was time-barred, as the show-cause notice was issued after a considerable period.

The Department's representative argued that the infrastructure cost collected with supervision charges formed part of the taxable value under Consulting Engineer's Services and should be subject to service tax. The Department contended that security and telephone services, for which cenvat credit was claimed, could not be segregated for taxable and non-taxable services and were used for providing exempted transmission of electricity services. The adjudicating authority confirmed the demand, stating that the services were used exclusively for providing exempted services. After hearing both sides, the Tribunal found that the infrastructure cost included in supervision charges should not be considered taxable under Consulting Engineer's Services. However, regarding the cenvat credit demand, the Tribunal was not convinced by the Applicant's argument that the services were used solely for taxable output services. The Tribunal directed the Applicant to deposit a specific amount within a set period, failing which the appeal would be dismissed. Compliance was to be reported by a specified date, and on depositing the directed amount, the balance dues would be waived, and recovery stayed during the appeal's pendency.