Home Case Index All Cases Service Tax Service Tax + AT Service Tax - 2009 (2) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2009 (2) TMI 118 - AT - Service TaxService Tax on Commercial or Industrial Construction Service / Works Contract Service - department has classified the impugned activity under the category works contract service introduced with effect from 1-6-2007. The definition of CICS was not modified when works contract services were brought under tax net - Therefore, prima facie, the demand and penalties were wrongly found to be due from URC. Stay Granted
Issues:
Waiver of pre-deposit of service tax and education cess, imposition of penalties under sections 76 and 78 of the Finance Act, 1994, classification of services under 'commercial or industrial construction services' (CICS), applicability of tax liability under CICS to government departments, argument regarding time-barred demand, registration as provider of "works contract services," sustainability of demand and penalties, classification of activity under 'works contract service,' relevance of case laws in supporting the assessee's plea. Waiver of Pre-deposit and Penalties: The application filed by M/s. URC Constructions (P.) Ltd. sought waiver of pre-deposit of an amount of Rs. 1,20,49,527 for service tax and education cess, along with penalties imposed under sections 76 and 78 of the Finance Act, 1994. The Commissioner had imposed penalties equal to the service tax and cess demanded, with a penalty rate of Rs. 200 per day for the delay in tax payment. The Tribunal considered the facts and case laws cited by the applicant, such as Diebold Systems (P.) Ltd. v. CST, Malar constructions v. CCE, and Daelim Industrial Co. Ltd v. CCE, and concluded that the demand and penalties were wrongly found to be due from URC. As a result, the Tribunal ordered a complete waiver of pre-deposit and a stay of recovery of the dues pending appeal. Classification of Services and Tax Liability: The Commissioner found that M/s. URC Constructions failed to pay tax on services provided under the category of 'commercial or industrial construction services' (CICS) for various government departments and undertakings. The appellant argued that tax liability under CICS applied only to constructions primarily used for commerce or industry, excluding certain structures like roads, airports, and dams. They contended that the recipients of their services, government departments, were not engaged primarily in commerce or industry. The Tribunal noted that the impugned activity was classified under 'works contract service' introduced from 1-6-2007, and the definition of CICS remained unchanged. Considering this, the demand and penalties were deemed unsustainable, leading to the waiver of pre-deposit and stay of recovery of dues. Time-barred Demand and Registration as Works Contract Service Provider: URC informed the department of their activities in 2006, and argued that major parts of the demand were time-barred as the department was aware of their services. They highlighted their registration as a provider of "works contract services" from 1-6-2007, emphasizing that demands for the same activity under different heads for an earlier period were not sustainable. The Tribunal agreed with these arguments, further supporting the assessee's plea by referencing relevant case laws and ordering the waiver of pre-deposit and stay of recovery of dues pending appeal. Conclusion: The judgment by the Appellate Tribunal CESTAT, Chennai, under the leadership of Ms. Jyoti Balasundaram, Vice President, and P. Karthikeyan, Technical Member, addressed the issues of waiver of pre-deposit, imposition of penalties, classification of services under CICS, applicability of tax liability to government departments, time-barred demands, registration as a works contract service provider, and sustainability of demand and penalties. Through a detailed analysis of the facts, arguments, and relevant case laws, the Tribunal concluded in favor of the appellant, ordering a complete waiver of pre-deposit and a stay of recovery of dues pending appeal.
|