2016 (7) TMI 46 - AT - Service Tax

Waiver of pre-deposit - Construction services - appellant argued that most of commercial or industrial activities have taken place in respect of construction of dams and related to the structure and therefore the same is not chargeable to service tax. He also argued that the residential complexes constructed by them was used by the service recipient and therefore, the same is also not covered by the definition of residential complexes as defined under section 65(91a) of the Finance Act, 1994 - considering the rival submission, stay granted partly.

Summary

Issues:
1. Whether the construction activities undertaken by the appellant are liable for service tax.
2. Whether the construction of residential complexes and industrial structures by the appellant falls under the definition of taxable services.
3. Applicability of service tax on construction activities based on the nature of the contract.
4. Validity of the demand raised by the Commissioner and the appeal filed by the appellants.
5. Consideration of pre-deposit amount as per the provisions of section 35F of the Central Excise Act, 1944.

Analysis:
1. The appellant, engaged in construction activities, was issued separate Show Cause Notices (SCNs) demanding significant amounts. The Commissioner confirmed the demands, leading to the appeal before the Tribunal. The appellant also filed a stay application.

2. The appellant's counsel argued that the construction activities related to dams and industrial structures are not chargeable to service tax. Additionally, it was contended that the construction of residential complexes, when used by the service recipient, does not fall under the definition of "residential complexes" for service tax purposes. Reference was made to a Supreme Court decision to support the argument that the nature of the contract was akin to a works contract, exempting them from service tax liability.

3. The AR representing the respondent supported the impugned order, asserting that service tax liability arises in cases where contractors are responsible for constructing residential accommodation. The distinction was made that when the owner employs labor and constructs independently, service tax liability does not apply. The AR also highlighted the exclusion in commercial and industrial construction services, specifying that it pertains only to certain types of constructions like dams, tunnels, powerhouses, and related structures.

4. After considering the arguments presented by both sides, the Tribunal ordered a pre-deposit of ?10 lakhs within eight weeks, in adherence to the provisions of section 35F of the Central Excise Act, 1944. The compliance report was scheduled for a specific date.

In conclusion, the judgment addressed the various contentions regarding the liability of service tax on construction activities, the interpretation of definitions, and the application of relevant legal provisions. The Tribunal's decision to require a pre-deposit reflected a procedural aspect to ensure compliance with statutory requirements.