2012 (4) TMI 431 - AT - Service Tax

Waiver and stay in respect of service tax and education and also equal amount of penalty - impugned demand is on construction of dams, roads, tunnels and bridges etc. done by the appellant in connection with execution of composite contracts - Held that - An EPC contract was executed by the appellant under a single composite contract and the construction of dam, roads, tunnels etc. was vivisectable - the definition of commercial or industrial construction service permitted the appellant to exclude the cost of construction of dams, roads, tunnels etc.from the gross amount covered by the EPC contract for the purpose of payment of service tax in favour of assessee.

Summary

Issues:
1. Whether the construction of dams, roads, tunnels, and bridges under a single composite contract is vivisectable for the purpose of payment of service tax.
2. Whether the appellant is entitled to exclude the cost of construction of dams, roads, tunnels, etc. from the taxable value under the definition of 'Commercial and Industrial Construction Service'.
3. Whether the appellant is eligible for waiver and stay in respect of the adjudged dues.

Analysis:

Issue 1:
The appellant sought waiver and stay regarding service tax and education cess totaling over Rs. 7.73 crores demanded for the period from 2005-06 to 2007-08, along with an equal amount of penalty. The impugned demand was based on construction activities under composite contracts for dams, roads, tunnels, and bridges. The appellant argued that the construction of these structures was vivisectable under a single composite contract, allowing exclusion from the taxable value for service tax purposes. The Commissioner contended that the contract was not vivisectable, citing relevant circulars. The Tribunal found a prima facie case for the appellant, noting similarities with previous cases where vivisection was allowed, and granted waiver and stay for the adjudged dues.

Issue 2:
The Tribunal analyzed the definition of 'commercial and industrial construction service' and considered the appellant's submissions. It found a prima facie case supporting the appellant's position that the construction of dams, roads, tunnels, etc. was vivisectable under the single composite contract. Referring to previous decisions, the Tribunal concluded that the appellant could exclude the cost of these structures from the gross amount covered by the contract for service tax payment. As service tax had already been paid on the remaining value, the impugned demand specifically related to the construction of dams, roads, tunnels, etc., making the appellant eligible for waiver and stay of the dues.

Issue 3:
Considering the arguments and the prima facie case in favor of the appellant, the Tribunal ordered waiver and stay in respect of the adjudged dues. This decision was pronounced and dictated in open court, providing relief to the appellant regarding the demanded service tax, education cess, and penalty for the specified period.