2016 (7) TMI 129 - AT - Service Tax

Waiver of pre-deposit - Valuation - works contract service - the distinction to be drawn between of value of the goods supplied as works contract and the value of service rendered for the purpose of service tax - reconsideration of its earlier order by the tribunal - Held that - 67% abatement was duly allowed (as the value of the goods was included in the gross receipts) for the purpose of arriving at the value of service. As regards the issue of taxability under the CICS/construction service when the service was rendered under Works Contract, while this issue was touched upon in para 3 of the stay order No. 51340/2014 dated 28/07/2015 (partially quoted above) it was considered in greater detail, taking due note of the Hon ble Supreme Court judgment in the case of CCE, Kerala vs. Larsen & Toubro Ltd. 2015 (8) TMI 749 - SUPREME COURT and others mentioned in para 4 of the Hon ble High Court order, in the CESTAT order passed in appellant s miscellaneous application on 09/2/2016 Thus, with due respect to Hon ble High Court s order, we find that the CESTAT stay order dated 28/7/2015 readwith the CESTAT s miscellaneous order dated 09/2/2016 adequately covered the two points mentioned in para 4 of the High Court s order for the interlocutory purpose of arriving at the amount of pre-deposit. Accordingly, we are of the considered view that there is no ground to alter the amount of pre-deposit ordered earlier vide stay order dated 28/7/2015.. Stay order not modified - assessee directed to comply with the order of pre-deposit - Decided against the assessee.

Summary

Issues:
1. Consideration of contentions regarding service tax demand for construction service.
2. Distinction between value of goods supplied and value of services rendered for service tax purposes.
3. Applicability of works contract service and commercial or industrial construction service.
4. Request for unconditional waiver of pre-deposit based on Supreme Court judgment.
5. Dismissal of miscellaneous application for waiver of pre-deposit.

Analysis:
1. The judgment revolves around the consideration of contentions related to a service tax demand for construction service. The Hon'ble High Court's order highlighted that the demand was in contravention of a circular clarifying the treatment of the activity as a works contract. The Court set aside the impugned orders and revived the stay application for a fresh decision.

2. The issue of distinguishing between the value of goods supplied and services rendered for service tax purposes was addressed. The CESTAT allowed a 67% abatement for the value of service, considering the inclusion of goods in the gross receipts. The judgment also discussed the taxability under the works contract service and commercial or industrial construction service, emphasizing the misconceived claim for immunity to service tax.

3. The judgment analyzed the applicability of works contract service and commercial or industrial construction service. It referenced the Larger Bench ruling in a specific case and directed a pre-deposit based on the interpretation of relevant sections of the Finance Act, 1994. The Court dismissed a creative contention for unconditional waiver of pre-deposit, considering it a dilatory strategy.

4. There was a request for unconditional waiver of pre-deposit based on a Supreme Court judgment regarding works contract taxation. The Court, however, found the request to be a dilatory strategy and dismissed the miscellaneous application. The appellant was directed to comply with the pre-deposit amount within a specified timeline, failing which the appeal would stand dismissed.

5. The miscellaneous application for waiver of pre-deposit was ultimately dismissed by the CESTAT. The Court upheld the pre-deposit amount ordered earlier and set a deadline for compliance. Failure to comply would result in the dismissal of the appeal for failure of pre-deposit. The judgment emphasized the importance of adhering to the legal procedures and obligations outlined in the previous orders.