2008 (3) TMI 202 - AT - Service Tax

Service of commercial and industrial construction service - While determining the gross value of the services, applicant has not disclosed and has not included the value of cement and steel received free from the recipients since entire amount of duty stands paid before issue of SCN and therefore, we hold that it is a fit case for waiver of penalties and interest

Summary

Issues:
Determining gross value for service tax, treatment of added value of cement and steel, applicability of Section 80 of the Finance Act, 1994, mandatory payment of interest, imposition of penalties.

Analysis:
The case involved a service provider offering commercial and industrial construction services who received cement and steel from service recipients for constructing buildings. The service provider did not disclose or include the value of the received cement and steel while determining the gross value for service tax. Consequently, the Commissioner included this value and confirmed a service tax demand of Rs. 1,17,32,437/-, along with penalties under Section 78 and Section 76. The duty amount had already been deposited before the issuance of the show cause notice.

The advocate for the service provider argued that the issue revolved around the method of determining the gross value and whether the value of cement and steel should be considered as cum-tax value, potentially resulting in an excess payment of duty. Additionally, the advocate claimed entitlement to the benefits under Section 80 of the Finance Act, 1994. On the other hand, the Joint Commissioner of Central Excise contended that interest, which had not been paid, was mandatory along with the duty, and penalties should be imposed in this case.

After careful consideration of the facts and circumstances, the Tribunal found that the entire duty amount had been paid upfront. Consequently, the Tribunal deemed it appropriate to waive penalties and interest until the appeal's final disposal. The Tribunal made a specific order to this effect, allowing the appeal to proceed in its due course.

In conclusion, the Tribunal's decision focused on the waiver of penalties and interest due to the upfront payment of the duty, emphasizing the need to consider all aspects of the case before making a judgment.