2007 (10) TMI 227 - AT - Service Tax

Demand confirmed holding the services rendered by appellants fall under the category of Site Formation and Clearance, Excavation and Earthmoving & Demolition Services under clause (105)(zzza) of section 65 - appellants have already paid the tax amount which has also been reimbursed to them by their clients - since tax liability is not being challenged, the interest liability is required to be discharged by appellants, - keeping in view the disputed nature of service, penalty is waived u/s 80

Summary

Issues involved:
1. Whether the services rendered by the appellants fall under the category of 'Site Formation and Clearance, Excavation and Earthmoving and Demolition Services' for Service Tax liability.
2. Whether the appellants are liable to pay interest and penalty on the Service Tax demand.
3. Whether there was a clerical error in computing the tax liability amount.

Analysis:
Issue 1:
The Adjudicating Commissioner confirmed the Service Tax demand on the appellants, holding their services to be falling under the category of 'Site Formation and Clearance, Excavation and Earthmoving and Demolition Services'. The appellants argued that their services were in the nature of mining service, not taxable before 1-6-2007. The Tribunal reviewed the case records and found that the activities undertaken by the appellants aligned with the defined services. While the tax liability was not contested by the appellants, the Tribunal noted that certain activities mentioned in the definition were part of the appellants' work. Therefore, the Tribunal upheld the Service Tax demand.

Issue 2:
The appellants contested the levy of interest and penalty. The Tribunal acknowledged that the tax liability was not challenged, and the tax amount had been reimbursed by the clients. Considering the disputed nature of the service and the steps taken by the appellants, the Tribunal decided to waive the penalty under section 80 of the Finance Act, 1994. However, the Tribunal held that the interest liability must be discharged by the appellants, as ordered by the Adjudicating Commissioner.

Issue 3:
The appellants claimed a clerical error in computing the tax liability amount. They argued that the correct amount should be Rs. 1,43,43,111 instead of Rs. 1,54,71,961. The Tribunal, upon hearing both sides, remanded the matter to the Original Authority for rectification of any calculation mistakes and for the correct calculation of the interest amount. The appeal was partly allowed, setting aside the penalty amount while confirming the tax demand and interest thereon.