2013 (10) TMI 536 - AT - Service Tax

Construction of Building - Benefit of Notification 4/2004 Waiver of Pre-deposit Held that - Prima-facie, the findings recorded by the adjudicating authority seems to be at variance from the wording of notification - The wordings of indicate that the Central Government intends to exempt the taxable services of any description provided to a unit (including a unit under construction) of Special Economic Zone by any service provider for consumption of services within such Special Economic Zone - When it was undisputed that the said services rendered by the appellant were consumed within Special Economic Zone - appellant had made out a prima-facie case for the waiver of pre-deposit of amounts involved - Stay granted.

Summary

Issues involved:
Waiver of pre-deposit of service tax, interest, and penalties under Finance Act, 1994 based on Notification No. 4/2004-ST for services provided within a Special Economic Zone.

Analysis:
The appellant filed a stay petition seeking the waiver of pre-deposit of an amount confirmed as service tax, interest, and penalties under various sections of the Finance Act, 1994. The adjudicating authority had confirmed the amounts as service tax liability, stating that the appellant had not rendered services directly to a unit in a Special Economic Zone to avail the benefit of Notification No. 4/2004-ST. The appellant had entered into a contract for construction activity within a Special Economic Zone, but the benefit of the notification was denied because the services were provided through other entities. The Tribunal noted that the wording of the notification exempts taxable services provided to a unit of a Special Economic Zone by any service provider for consumption within the zone. As the services provided by the appellant were consumed within the Special Economic Zone, the Tribunal found the denial of benefit based on the intermediary entities to be questionable. The Tribunal held that the appellant had made out a prima facie case for the waiver of pre-deposit, as the denial seemed to be at variance with the notification's intent.

The Tribunal considered that the appellant's services were consumed within the Special Economic Zone, which aligned with the notification's purpose of exempting taxable services consumed within the zone. The Tribunal found the denial of benefit based on the intermediary entities through which the services were provided to be inconsistent with the notification's wording. Therefore, the Tribunal allowed the application for the waiver of pre-deposit of the amounts involved and stayed the recovery until the appeal's disposal. The decision was made to uphold the appellant's prima facie case for the waiver, considering the services' consumption within the Special Economic Zone as the key determining factor.

In conclusion, the Tribunal's judgment focused on the interpretation of Notification No. 4/2004-ST concerning the exemption of taxable services provided within a Special Economic Zone. The Tribunal found that the denial of benefit to the appellant based on the involvement of intermediary entities was not in line with the notification's intent. Therefore, the Tribunal granted the waiver of pre-deposit and stayed the recovery of the amounts involved until the appeal's final disposal. The decision emphasized the importance of services being consumed within the Special Economic Zone for the applicability of the notification's exemption provisions.