2012 (11) TMI 291 - AT - Service Tax

Erection, commissioning and installation services - demand confirmed by invoking the extended period of limitation - Held that - The demand for the period 2005-06 to 2009-10 is confirmed by invoking the extended period by issuing a Show Cause Notice dated 18.10.2010. The audit was conducted in the year 2009 and the audit raised issue in respect of Goods Transport Service and the applicants paid tax as per the objection raised by the audit. In view of this prima facie the applicants have a strong case on the issue of time bar - in favour of assessee. Claim of Notification No. 12/2003-ST - Demand for the period 2009-10 is within the normal period of limitation and the benefit of the Notification No. 12/2003-ST is not available to applicants as he had not produced evidence by way of invoices under which the goods were sold to the service recipient - against assessee. Claim of Notification No. 1/2006-ST - The applicants availed credit of service tax in respect of the input service to the extent of about Rs. 30 lakhs, in these circumstances, the applicants have not made out a prima facie case for total waiver of the dues, thus the applicants are directed to deposit Rs One crore within eight weeks and report compliance on 03.12.2012.

Summary

Issues:
1. Waiver of pre-deposit of service tax, interest, and penalties.
2. Interpretation of taxable services under erection, commissioning, and installation of power stations.
3. Demand of service tax based on gross amount received in contracts.
4. Invocation of extended period of limitation for demand confirmation.
5. Consideration of balance-sheet figures for confirmation of demand.
6. Exclusion of material cost for levy of service tax on erection, commissioning, or installation charges.
7. Applicability of Notification No. 1/2006-ST providing abatement.
8. Cum-duty tax benefit allowance.
9. Terms and conditions of the contract for lump sum consideration.
10. Requirements for benefit under Notification No. 12/2003-ST.
11. Availment of credit affecting benefit under Notification No. 1/2006-ST.
12. Time bar issue regarding disclosure of contract terms.
13. Taxability of service value and time bar issue.
14. Demand calculation within the normal period of limitation and benefit claims under Notifications.
15. Compliance and deposit requirements for waiver of pre-deposit.

Analysis:
1. The applicant sought waiver of pre-deposit of a substantial service tax amount, interest, and penalties. They provide taxable services related to power stations and pay service tax based on material value. The Revenue demanded service tax on gross contract amounts, citing suppression of facts to evade tax.

2. The dispute revolves around the interpretation of taxable services provided by the applicant during erection, commissioning, and installation activities. The Revenue contends that lump sum contract amounts received constitute taxable service consideration, leading to the demand for service tax.

3. The Revenue invoked the extended period of limitation, alleging suppression of material facts. The applicant argued against this, highlighting the inclusion of trading activities in balance sheet figures and the exclusion of material costs for service tax calculation under specific notifications.

4. The applicant challenged the demand based on the time bar issue, emphasizing the Revenue's audit in 2009 and subsequent tax payments. The Tribunal found merit in the time bar argument, considering the audit history and objections raised.

5. The Tribunal assessed the demands for different periods, addressing the benefit claims under Notifications No. 12/2003-ST and No. 1/2006-ST. The applicant's failure to provide documentary evidence regarding material sales impacted the benefit eligibility.

6. Ultimately, the Tribunal directed the applicant to deposit a specified amount within a deadline, considering the non-fulfillment of notification conditions and credit availed. Compliance with the deposit requirement would lead to the waiver of the remaining service tax, interest, and penalties during the appeal process.