2015 (11) TMI 624 - AT - Service Tax

Waiver of pre deposit - small service provider exemption - benefit of exemption Notification No.06/2005 - Commercial or Industrial Construction Service - Held that - Prior to 01.06.2007, works contract was not liable to service tax and as a consequence of which, prima facie the appellant became eligible for the benefit of exemption Notification No.06/2005 during the remaining part of the financial year 2007-08. Extending that benefit, the appellant claims, the demand would reduce to ₹ 1,43,858/- (which is more than 50% of the impugned demand). Accordingly, we order pre-deposit of ₹ 1,43,858/- along with proportionate interest within eight weeks. Compliance is to be reported by 19.10.2015. Subject to such compliance, recovery of the remaining adjudicated liabilities is stayed during pendency of the appeal - Partial stay granted.

Summary

Issues:
1. Service tax demand for the period 01.04.2007 to 31.03.2009 on the ground of providing Commercial or Industrial Construction Service.
2. Applicability of exemption Notification No.06/2005 to reduce the service tax liability.
3. Pre-deposit amount and stay of recovery during the appeal.

Analysis:

1. The appeal was filed against the Order-in-Appeal upholding a service tax demand for providing Commercial or Industrial Construction Service. The appellant argued that the service was part of a composite contract and thus not liable for service tax before 01.06.2007. The Tribunal acknowledged that works contract was not taxable before this date, making the appellant eligible for exemption under Notification No.06/2005 for the remaining part of the financial year 2007-08. Consequently, the demand was reduced to &8377; 1,43,858, more than 50% of the original demand.

2. The Tribunal ordered a pre-deposit of &8377; 1,43,858 along with proportionate interest within eight weeks, with compliance due by a specified date. It was further directed that recovery of the remaining adjudicated liabilities would be stayed during the appeal process. However, failure to make the pre-deposit would result in the dismissal of the appeal for non-compliance.

This judgment highlights the importance of understanding the timeline of tax liabilities and the applicability of relevant exemptions. The Tribunal carefully considered the appellant's contentions and provided a favorable decision based on the legal provisions and notifications in force during the relevant periods. The order for pre-deposit and stay of recovery demonstrates the procedural requirements to be followed during the appeal process to ensure compliance with tax laws.