2008 (8) TMI 87 - AT - Service Tax

Construction for water distribution pipelines network, water treatment plants etc. for Gujarat Water Supply and Sewerage Board (GWSSB) - appellants submits that their activity is not liable to service tax at all since GWSSB is not a commercial concern and therefore, their activity is not liable to tax at all. He also submits that the financial position of the company is not very sound Stay not granted completely

Summary

Issues:
1. Whether construction of long distance pipelines falls under the category of commercial or industries construction service for service tax liability.
2. Whether the appellant's activity for Gujarat Water Supply and Sewerage Board (GWSSB) is liable for service tax.
3. Whether the appellants are required to make a pre-deposit for the disputed amount.

Analysis:
1. The judgment addresses the issue of whether the construction of long distance pipelines falls under the category of commercial or industries construction service for service tax liability. It is noted that after the amendment of the Finance Act in 2005, construction of long distance pipelines was brought under the purview of commercial or industries construction service. The investigation by the Department resulted in a show-cause notice proposing a significant demand for service tax. The Tribunal considered the arguments presented and ordered the appellants to make a pre-deposit to continue the appeal process.

2. The next issue pertains to whether the appellant's activity for Gujarat Water Supply and Sewerage Board (GWSSB) is liable for service tax. The appellant argued that their activity should not be subject to service tax as GWSSB is not a commercial concern. Additionally, they highlighted their company's financial position, emphasizing a marginal profit in the previous year. Despite these submissions, the Tribunal ordered a pre-deposit while granting a waiver for the balance amount of duty, penalty, etc., during the appeal's pendency.

3. Lastly, the judgment addresses the requirement for the appellants to make a pre-deposit for the disputed amount. The Tribunal, after considering the facts, circumstances, and arguments presented, directed the appellants to deposit a specified amount within a given timeframe. The compliance report was scheduled for a specific date, and subject to this pre-deposit and compliance reporting, the requirement for further pre-deposit of the balance amount and the recovery of such balance amount were stayed during the appeal process.