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The Appellate Tribunal CESTAT NEW DELHI, consisting of Shri D.N. Panda and Rakesh Kumar, JJ., heard an appeal from Shri S.K. Pahwa, Advocate, representing the Appellant, and Shri S.K. Panda, Jt. CDR, representing the Respondent. The nature of the contract under dispute involves the renovation of an old building, with a large quantity of goods required for the work. The Appellant argues that 80% of the work's value should be deducted for materials, while 20% should be subject to service tax. The Appellant has been regularly depositing service tax at 33% of the work's value and claims that the demand for Rs. 7.8 crores lacks a basis, especially during a financial downturn in the real estate industry.
The Respondent contends that the appeal falls under Section 73 of the Finance Act, 1994, due to findings from an investigation. The Appellant's claim for benefits under Notification 12/2003 was denied, citing a well-reasoned order that should not be interfered with. After hearing both sides and reviewing the records, it was found that the Appellant had a contract with Degremont Ltd. The involvement of goods in the contract needs further examination, particularly in relation to the VAT law attributing 80% of the work's value to goods. In light of the financial hardship plea from the Appellant, a pre-deposit of Rs. 1,00,00,000/- was directed to be made within eight weeks, with the balance demand realization stayed during the appeal process. The order was dictated and pronounced in open court.
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