2008 (9) TMI 85 - AT - Service Tax

Site preparation and clearance - Tax liability on the activity undertaken by the appellants being under challenge before the Commissioner (A), penalty under Section 76 of the Act could not have been validly imposed on the appellants in a revisional order by Commissioner (Appeals)- Accordingly, the impugned order is set aside as it is pre-mature and the matter is remanded to the Commissioner

Summary

Issues:
1. Waiver of pre-deposit and stay of recovery of penalty under Section 76 of the Finance Act, 1994.
2. Classification of service rendered by the appellants as 'site preparation and clearance service'.
3. Imposition of penalties under Sections 77, 78, and 76 of the Act.
4. Validity of the revisional order passed by the Commissioner.

Analysis:
1. The appellant, M/s. Mani Engineering Works, sought waiver of pre-deposit and stay of recovery of penalty imposed under Section 76 of the Finance Act, 1994. The Commissioner had imposed penalties after finding the appellants liable for rendering the service of 'site formation clearance, excavation, earth moving, and demolishing' classified under 'site preparation and clearance service'. The period of dispute was for financial years 2005-06 and 2006-07. The appellant challenged the tax demanded and penalties imposed by the original authority before the Commissioner (Appeals), with the appeal pending at the time of the application.

2. The appellants argued that the activity in question did not constitute 'site preparation and clearance' service, as they had merely rented out cranes on a hire basis to another company. They contended that this was not a taxable activity. The appellant's representative submitted that imposing penalties under both Sections 78 and 76 of the Act was unjustifiable. On the other hand, the JCDR representing the respondent contended that there was no issue with the revisional order but acknowledged that it was prematurely passed while an appeal was pending before the Commissioner (Appeals).

3. The Tribunal noted that the revisional order by the Commissioner was premature, as per sub-section (4) of Section 84 of the Act, which prohibits passing orders when an appeal on the same issue is pending. Since the appellants had challenged the tax liability before the Commissioner (Appeals), the imposition of penalty under Section 76 of the Act was deemed invalid. The Tribunal set aside the impugned order and remanded the matter to the Commissioner of Central Excise for adjudication at the appropriate time as per the law. This decision was based on the fact that the penalty was imposed prematurely without waiting for the appeal process to conclude.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, Chennai, highlights the issues of waiver of pre-deposit, classification of services, imposition of penalties, and the validity of the revisional order, providing a comprehensive understanding of the legal proceedings and decisions made in this case.