2015 (11) TMI 625 - AT - Service Tax

Waiver of pre deposit - dredging services - appellant submits that as per the definition of dredging , it does not include canals and not specified in the definition in Section 65 (36a) - construction of Tsunami houses, quarters for Tamil Nadu Govt officers etc. - Held that - Appellant s plea of rendering of dredging services which related to government is not tenable in view of Final Order of Tribunal in the case of Mackintosh Burn Ltd. (2010 (5) TMI 435 - CESTAT, KOLKATA) - appellants have not made out a case for waiver of service tax on the services. Appellant s reliance on International Seaport Dredging Ltd. (2013 (8) TMI 676 - CESTAT Chennai) is only an interim order. Accordingly, we direct the appellant to deposit a sum of ₹ 10,00,000 within 8 weeks. Upon such deposit, predeposit of balance demand, interest and penalty shall stand waived and recovery thereof stayed during pendency of appeal. - Partial stay granted.

Summary

Issues:
Application for waiver of predeposit of service tax on construction of government buildings and residential complex; Interpretation of the definition of "dredging" for service tax purposes.

Analysis:
The appellant filed an application seeking waiver of predeposit of service tax amounting to Rs. 1,75,16,876/- along with interest and penalty, which was confirmed for services related to the construction of government buildings and residential complexes. The consultant for the appellant argued that a significant portion of the demand pertained to dredging services specified in the show cause notice, while the rest related to construction activities like Tsunami houses and quarters for government officers. The consultant contended that dredging services did not include canals and fell under works contract. He cited a Tribunal's Stay Order in support of his argument.

On the contrary, the A.R. relied on the findings of the Original Adjudicating Authority (OIO) and referred to a case law involving Mackintosh Burn Ltd. The Tribunal analyzed the definition of "dredging" and its taxable services, emphasizing that dredging activities undertaken in a river were subject to service tax. The Tribunal highlighted that the purpose of dredging in a river, whether navigational or otherwise, was irrelevant. The Board's instructions clarified that dredging services covered activities in rivers, ports, harbors, backwaters, or estuaries for maintaining shipping channels.

After considering both sides, the Tribunal concluded that the appellant's argument regarding rendering dredging services to the government was not valid based on the Final Order in the Mackintosh Burn Ltd. case. The Tribunal emphasized that dredging services were not limited to just maintaining shipping channels and that the definition was inclusive, covering various activities in rivers, ports, etc. Consequently, the Tribunal ruled against the appellant's plea for waiver of service tax. The appellant was directed to deposit a specified amount within a deadline, following which the predeposit of the remaining demand, interest, and penalty would be waived, and recovery stayed during the appeal's pendency.