2009 (6) TMI 473 - AT - Service Tax

Commercial and industrial construction services- The appellant has deposited full amount of service tax demanded and is challenging portion of the demand on the ground that the appellant is not a commercial concern and, therefore, tax was not leviable prior to 16-6-2005 and is also contesting the penalty. Held that in the light of section 80 and the appellant was not a commercial concern and, therefore, tax was not leviable prior to 16.6.2005, waive the requirement of pre-deposit and allow stay application.

Summary

Issues:
1. Liability of service tax on construction services provided by the appellant.
2. Imposition of penalties under sections 76, 77, and 78 of the Finance Act, 1994.

Analysis:
1. The appellant, engaged in providing construction services to ONGC, was demanded service tax for specific periods along with penalties. The appellant contested the demand, arguing that they were not a commercial concern before 16-6-2005 and thus not liable to pay service tax. The appellant, represented by a chartered accountant, claimed leniency under section 80 of the Finance Act, 1994, citing lack of awareness of the law changes and no intention to evade tax. Considering the arguments and the change in the definition of levy for service tax in construction activities, the Tribunal waived the pre-deposit requirement and unconditionally allowed the stay petition during the appeal, noting the appellant's individual proprietorship status and full payment of the demanded service tax.

2. The Tribunal acknowledged the appellant's plea regarding the penalties imposed under sections 76, 77, and 78 of the Finance Act, 1994. The appellant's representative highlighted their lack of familiarity with the legal intricacies and the changes in the law, emphasizing a strong case for leniency. The Tribunal, after considering the arguments and the appellant's compliance with the service tax payment, decided to waive the pre-deposit requirement and grant an unconditional stay during the appeal process. This decision was influenced by the appellant's individual proprietorship status, lack of intent to evade tax, and the changes in the definition of service tax liability for construction activities.