2015 (12) TMI 147 - AT - Service Tax

Demand for service tax - Construction service - canal dump supply - Held that - According to the definition of personal use under the residential complex service, construction of quarters for providing accommodation to the employees is considered as personal use. Therefore, prima facie, the appellants have a case in their favour for waiver. No sale is involved and the assessees performed the job of transporting the goods. Apparently the canal dump is the boulders and the other things arising while digging the canal and it is submitted that it was used for making the gravel road nearly 3 kms. away from the canal. No classification of service has been made and we find that the activity, prima facie, does not come under the category of cargo handling or under the GTA service. Therefore, appellants have made out a prima facie case for waiver. There is no exclusion of private railways from exemption in the definition of works contract service and therefore we consider that the appellant has a prima facie case for waiver in respect of this demand also. Amounts paid by the appellant relates to the year 2009-10 only and not to the earlier year. Therefore we consider that appellant should deposit the amount relatable to the year 2008-09 in respect of which, the appellant does not have a prima facie case for waiver and the amount involved comes to ₹ 11 lakhs according to the learned CA. After calculating interest payable on a rough estimate basis on this amount and even though financial difficulty was pleaded, we could not consider the case because the appellant is clearly liable to pay service tax on this amount and further in the subsequent year they have collected the tax and that was also not paid immediately. - Partial stay granted.

Summary

Issues:
1. Whether construction activities for Jayajothi Cement Ltd. amount to rendering works contract service?
2. Whether the supply of canal dump falls under the category of service tax?
3. Whether the construction of a railway platform qualifies as works contract service?
4. Whether the demand for service tax on crusher house work is justified, and if abatement has been provided?

Analysis:
1. The appellant, engaged in construction business, executed contracts for Jayajothi Cement Ltd. (JCL) from April 2008 to September 2010. The demand for service tax of Rs. 51,48,504/- was confirmed, alleging works contract service for construction activities. The appellant argued that constructing quarters for employee accommodation does not constitute works contract service under the residential complex service definition. The Tribunal found a prima facie case for waiver in this regard.

2. Concerning the supply of canal dump, the classification of service was unclear, with service tax demanded without proper categorization. The Tribunal observed that the activity did not fit under cargo handling or GTA service. The appellant demonstrated a prima facie case for waiver due to lack of clarity on the service provided.

3. The dispute over railway platform construction involved the appellant's claim that works contract service for Railways was not applicable as the service was provided to JCL, not Railways directly. The Tribunal noted the absence of exclusion of private railways from works contract service exemption, supporting the appellant's prima facie case for waiver.

4. Regarding the crusher house work, a service tax demand of Rs. 36,49,104/- was imposed, with the appellant arguing non-provision of abatement and partial payment. The Tribunal found that the appellant needed to deposit the amount related to the year 2008-09, as no prima facie case for waiver existed. The appellant was directed to deposit Rs. 18 lakhs within eight weeks, with a stay against recovery granted for 180 days upon compliance.