2013 (2) TMI 299 - AT - Service Tax

Pandal or Shamiana Contractor s services. Vs. Erection, Commissioning or Installation services Activity undertaken by the appellant consists of erection of temporary structures for their clients who wanted such structures for conducting business functions such as trade fair, exhibitions, etc Appellant have been paying Service tax on this activity from 1-5-2006 under Erection, Commissioning or Installation services SCN issued for the period November, 2004 to December, 2005 on 01.09.2008 Held that - After the amendment brought to the definition of Erection, Commissioning or Installation w.e.f. 1-5-2006, the service provided by a commissioning and installation agency in relation to erection, commissioning or installation of plant, machinery, equipment or structures, whether pre-fabricated or otherwise would also come within the purview of Erection, Commissioning or Installation Services . Prima facie, the term structures appearing in the amended definition of Erection, Commissioning or Installation Services should be understood ejusdem generis with the terms plant , machinery and equipments figuring prior to it. In this view, the claim of the appellant for classifying their activity under the head Erection, Commissioning or Installation Services is prima facie untenable. Extended period of limitation In this case appellant had not disclosed the relevant materials to the department voluntarily before the department s auditors visited them. Prima facie, relevant facts were suppressed with intent to evade Service tax which was leviable under the head Pandal or Shamiana Contractor s services - Therefore plea of limitation is prima facie unacceptable There is no financial hardships. Appellant was directed to pre-deposit the amount within 6 weeks and report to the Assistant Registrar - Subject to compliance, there will be waiver of pre-deposit and stay of recovery in respect of interest on tax, penalties and the balance amount of Service tax.

Summary

Issues:
1. Waiver of pre-deposit and stay of recovery in respect of Service tax, interest, and penalties.
2. Classification of the appellant's activity under the head "Pandal or Shamiana Contractor's services."
3. Applicability of the term "Erection, Commissioning or Installation Services" to the appellant's activity.
4. Plea of limitation and financial hardships raised by the appellant.

Issue 1: Waiver of Pre-deposit and Stay of Recovery:
The appellant sought waiver of pre-deposit and stay of recovery concerning Service tax, interest, and penalties amounting to over Rs. 51 lakhs demanded by the adjudicating authority for the period from November, 2004 to December, 2005. The appellant argued financial hardships and non-liability to pay Service tax under the head "Pandal or Shamiana Contractor's services." However, the tribunal found no prima facie case for the appellant. The tribunal also rejected the plea of limitation and lack of evidence regarding financial hardships. As a result, the tribunal directed the appellant to pre-deposit Rs. 25 lakhs within 6 weeks.

Issue 2: Classification of Appellant's Activity:
The appellant contended that their activity should be classified under the head "Erection, Commissioning or Installation Services" instead of "Pandal or Shamiana Contractor's services." The tribunal analyzed the amendment to the definition of "Erection, Commissioning or Installation" under Section 65 of the Finance Act, 1994, effective from 1-5-2006. The tribunal observed that the term "structures" in the amended definition should be understood ejusdem generis with "plant," "machinery," and "equipments." Consequently, the tribunal found the appellant's claim for classification under "Erection, Commissioning or Installation Services" prima facie untenable due to the temporary nature of the structures erected by them.

Issue 3: Applicability of Erection, Commissioning or Installation Services:
The tribunal further examined whether the appellant's activity aligns with the scope of "Erection, Commissioning or Installation Services." It noted that the structures erected by the appellant for short-term functions were temporary in nature and dismantled after the events. The tribunal opined that the words "commissioning" and "installation" do not fit the appellant's activity, leading to the conclusion that the appellant failed to establish a prima facie case against the Service tax demand under the head "Pandal or Shamiana Contractor's services."

Issue 4: Plea of Limitation and Financial Hardships:
Regarding the plea of limitation, the tribunal found that the appellant did not disclose relevant information voluntarily before the department's auditors visited them. The tribunal considered the timing of disclosure in April 2006, towards the end of the demand period, as insufficient. The tribunal deemed the department's allegation of suppression of facts to evade Service tax as tenable, rejecting the appellant's plea of limitation. Moreover, the tribunal did not find evidence supporting the appellant's claim of financial hardships.

This judgment by the Appellate Tribunal CESTAT, Bangalore, involved issues related to the classification of the appellant's activity for Service tax purposes, the plea for waiver of pre-deposit and stay of recovery, and the examination of the appellant's contentions against the impugned demand. The tribunal's detailed analysis addressed each issue comprehensively, ultimately directing the appellant to make a pre-deposit while rejecting their claims and pleas based on the legal and factual considerations presented during the proceedings.