2012 (6) TMI 330 - AT - Service Tax

Demand of service tax - construction of petrol bunks - works contract service - applicant was under the bona fide belief that their activities did not fall under Commercial or Industrial Construction Service and therefore did not take registration and pay service tax Held that - activities undertaken by them clearly relates to Commercial or Industrial Construction Service - claim of the appellant is that they were under bona fide belief that their activities did not fall under Commercial or Industrial Construction Service appears not acceptable.

Summary

Issues: Liability for service tax under 'Commercial or Industrial Construction Service', invocation of extended period of limitation, abatement under Notification No. 1/2006-S.T.

Liability for service tax under 'Commercial or Industrial Construction Service': The appellant, engaged in construction activities for public sector oil companies, claimed they were paying VAT under 'works contract service' and thus not liable for service tax under 'Commercial or Industrial Construction Service'. The original authority demanded service tax for a specific period, which the appellant contested. The Tribunal found the appellant's belief not acceptable, citing a previous case where service tax liability was recognized from a certain date. While the appellant failed to establish a prima facie case against the demand, they were granted abatement under Notification No. 1/2006-S.T. The Tribunal directed the appellant to deposit a specified sum within six weeks for stay of recovery pending appeal.

Invocation of extended period of limitation: The appellant argued against the invocation of the extended period of limitation, claiming financial hardships and reliance on the Tribunal's stay order in a similar case. The department contended that the appellant's activities clearly fell under 'Commercial or Industrial Construction Service', justifying the extended period. The Tribunal noted the lack of registration and return filings by the appellant, supporting the department's decision to invoke the extended period of limitation. Despite the appellant's plea, the Tribunal upheld the invocation of the extended period based on the nature of the activities undertaken.

Abatement under Notification No. 1/2006-S.T: The Tribunal recognized the appellant's eligibility for abatement under Notification No. 1/2006-S.T, allowing a 67% reduction in the dues. Considering the overall circumstances, the Tribunal directed the appellant to deposit a specified amount within a set timeframe for compliance. Upon compliance, the Tribunal waived the pre-deposit of the remaining dues as per the original order and stayed recovery pending appeal, providing relief to the appellant while ensuring compliance with the abatement requirements.