2008 (4) TMI 187 - AT - Service Tax

Commercial and industrial construction service appellant not included the value of cement and steel received from the recipient of the services - benefit of Notification No. 18/2005 denied and demand and penalties were confirmed - entire duty stands deposited before issuance of show cause notice - it is a fit case for waiver of penalties and interest till the disposal of the appeal

Summary

Issues:
Determining gross value for service tax, treatment of added value of cement and steel, entitlement to benefit of Section 80 of the Finance Act, 1994, imposition of penalties, waiver of penalties and interest.

Analysis:

1. Determining Gross Value for Service Tax:
The appellant, providing commercial and industrial construction services, received cement and steel from recipients but did not disclose or include their value while determining the gross value for service tax. The Commissioner included this value, leading to a demand for service tax and penalties under Section 76. The appellant argued that the issue involves the manner of determining the gross value. The Tribunal noted that the duty amount had already been deposited before the show cause notice, and considering the circumstances, held it as a fit case for waiver of penalties and interest pending appeal.

2. Treatment of Added Value of Cement and Steel:
The key contention was whether the added value of cement and steel should be treated as cum-tax value, potentially resulting in an excess payment of duty. The appellant sought the benefit of Notification No. 18/2005 and provisions of Section 80 of the Finance Act, 1994. The Tribunal's decision to waive penalties and interest till the appeal's disposal indicates a favorable approach towards the appellant's argument regarding the treatment of added value.

3. Entitlement to Benefit of Section 80 of the Finance Act, 1994:
The appellant claimed entitlement to the benefit of Section 80 of the Finance Act, 1994, in relation to the service tax demand and penalties imposed. While the Tribunal did not explicitly address this specific provision in its order, the decision to waive penalties and interest suggests a consideration of the appellant's arguments regarding statutory benefits and provisions.

4. Imposition of Penalties:
The Respondent argued for the mandatory payment of interest along with the duty and imposition of penalties. However, the Tribunal, after careful consideration of the facts and circumstances, decided that the entire duty amount had been paid and thus ordered the waiver of penalties and interest until the appeal's final disposal. This decision indicates a lenient approach towards penalties in this particular case.

In conclusion, the Tribunal's judgment in this case primarily revolves around the determination of the gross value for service tax, treatment of added value of materials, entitlement to statutory benefits, and the imposition of penalties. The decision to waive penalties and interest showcases a balanced consideration of the appellant's arguments and the specific circumstances of the case.