2013 (10) TMI 684 - AT - Service Tax

Penalty u/s 77 and 78 - Work contracts - Held that - Prima facie, we find that the Applicant Company is a Government of India Enterprise and had rendered services mainly relating to construction of the roads, bridges, dams etc., which fall under the exception clause of the definition of Commercial and Industrial Construction Services. Further, we find that the Applicant were registered with the State Government of Bihar under the relevant Sales Tax Act under the category of Works Contract. In these circumstances, the Applicant could able to make out a prima facie case for total waiver of the predeposit of all dues adjudged. - stay granted.

Summary

Issues:
Application for waiver of predeposit of Service Tax and penalties under Sections 77 and 78 of the Finance Act, 1994.

Analysis:
The Appellant, a Government of India Enterprise, sought waiver of predeposit of Service Tax amounting to Rs.4,01,77,692/- along with penalties imposed under Sections 77 and 78 of the Finance Act, 1994. The Appellant contended that they had executed various works against seven agreements, primarily related to construction activities such as road construction, civil works, and restoration of embankment. The Appellant argued that they were registered under Works Contract with the State Government of Bihar and had discharged tax liability under the relevant State Act. The Appellant claimed that the services rendered fell under Works Contract, even though alleged to be Commercial or Industrial Construction Services. The Appellant asserted that their services were exempted as they related to construction of roads, bridges, dams, etc. These contentions were not considered by the Commissioner initially.

The Revenue, represented by the ld. AR, reiterated the findings of the Commissioner (Appeals) during the proceedings. After hearing both sides and examining the records, the Tribunal observed that the Appellant, being a Government of India Enterprise, primarily provided services related to construction of roads, bridges, dams, etc., falling under the exception clause of Commercial and Industrial Construction Services. Additionally, the Tribunal noted that the Appellant was registered with the State Government of Bihar under the Works Contract category. Consequently, the Tribunal found that the Appellant had established a prima facie case for the total waiver of predeposit of all dues adjudged. Therefore, the Tribunal granted the waiver and stayed the recovery of all dues during the pendency of the Appeal, allowing the Stay Petition.

In conclusion, the Appellate Tribunal, considering the nature of services provided by the Appellant and their registration under Works Contract with the State Government of Bihar, granted the waiver of predeposit and stayed the recovery of the dues, acknowledging the prima facie case made by the Appellant for exemption based on the type of services rendered.