2016 (6) TMI 412 - AT - Service Tax

Stay petition - realization of demand during pendency of appeal - goods used in works contract prior to 01.06.2007 - Held that - in view of the settled position of law enunciated by Apex Court in the case of CCE, Kerala Vs. Larsen & Toubro Ltd. 2015 (8) TMI 749 - SUPREME COURT , dispensing with the requirement of pre-deposit, the appeal is remitted back to the adjudicating authority with some guidelines. - Stay application disposed of

Summary

Issues:
1. Taxability of the amount mentioned in the show cause notice.
2. Applicability of service tax on works contracts executed by the appellant.
3. Necessity of tax on works contracts executed before 01.06.2007.
4. Stay of realization of demand during appeal.
5. Remand of the matter to the adjudicating authority.
6. Guidelines for remittance of the appeal.

Analysis:
1. The primary issue in this case revolves around the taxability of the amount of ?113,55,71,963 mentioned in the show cause notice, leading to a total tax demand of ?13,38,45,872. The appellant argues that this amount represents the value of goods used in works contracts and is not subject to service tax under the Finance Act, 1994, emphasizing that the Act is not a Commodity Taxation Law. The appellant further contends that the controversies regarding the taxability of works contracts were resolved by a previous judgment of the Apex Court, making it unnecessary to tax works contracts executed before 01.06.2007, even if payments were received after this date.

2. The appellant seeks a stay on the realization of the demand pending the appeal due to the conflicting interpretations of the law by both sides. The tribunal considers it appropriate to remand the matter back to the adjudicating authority without requiring a pre-deposit, to re-examine the issues in light of the aforementioned Apex Court judgment, given the substantial service tax demand involved in the appeal.

3. The tribunal decides to remit the appeal back to the adjudicating authority with specific guidelines to be followed. These guidelines include providing detailed information on the gross value of receipts related to works contracts, submitting copies of the works contract agreements, raising defense pleas in writing, and ensuring that the adjudicating authority focuses only on the taxability of services in works contracts executed before 01.06.2007 based on the Apex Court judgment.

4. The adjudicating authority is instructed to thoroughly review the Larsen & Toubro Ltd. judgment, grant a fair hearing to the appellant, and issue a well-reasoned order. It is emphasized that the previous order, which is being set aside, should not influence the new decision, and the authority should independently assess the case in accordance with the law.

5. The appellant is directed not to seek adjournments during the hearing process, and the adjudicating authority is tasked with fixing hearing dates starting from July 2016 and concluding the matter by 30th September 2016. Ultimately, the stay application is disposed of, and the appeal is remanded to the adjudicating authority with the outlined directions for further proceedings.