2013 (11) TMI 455 - AT - Service Tax

Demand of service tax - Amount collected as service tax not deposited - Held that - On perusal of the balance sheet produced before the Bench for the year ending 31.03.2012, we find that the appellant is not in that kind of financial difficulty which would preclude him from depositing the amount which has been collected. In our view, even if there is any financial hardship/difficulty, any amount collected by an assessee as Service Tax liability from his customers, needs to be deposited at the correct time with the Government of India. Keeping in mind that the appellant has deposited an amount of Rs.25.56 lakhs and the amount of Service Tax liability which has been collected comes to approximately Rs.2.25 Crores, we direct the appellant to deposit an amount of Rs.2.25 Crores within a period of eight weeks from today - stay of interest and penalty granted.

Issues involved:
Service Tax liability on entire contract amount under construction services, non-deposit of collected Service Tax by the appellant, financial difficulties claimed by the appellant, directive to deposit the collected Service Tax amount, application for waiver of pre-deposit of balance amounts, stay on recovery pending appeal disposal.

Service Tax liability on entire contract amount under construction services:
The judgment addresses the Service Tax liability imposed on the appellant for the entire amount of the contract executed by them under the category of Construction services. The appellant raised defenses not considered by lower authorities. The appellant's claim regarding the inclusive value of the contract and CENVAT Credit was not granted. The Departmental Representative highlighted that the appellant collected Service Tax from clients but did not deposit it with the Government. The Tribunal emphasized the need for the appellant to deposit the entire collected Service Tax amount to consider the issue on merits.

Non-deposit of collected Service Tax by the appellant:
The Tribunal expressed concern over the appellant's failure to deposit the collected Service Tax amount with the Government despite billing clients and collecting the tax. The appellant's financial difficulties were cited as a reason for non-deposit. However, upon reviewing the appellant's financial statements, the Tribunal found no substantial financial difficulty that would prevent the appellant from depositing the collected amount. The Tribunal directed the appellant to deposit the entire collected Service Tax amount within a specified timeframe.

Financial difficulties claimed by the appellant:
The appellant claimed to be facing financial difficulties as a reason for not depositing the collected Service Tax amount. However, the Tribunal, after reviewing the appellant's financial statements, concluded that the appellant was not in significant financial distress that would justify non-depositing of the collected amount. The Tribunal emphasized the obligation of an assessee to deposit any collected Service Tax liability with the Government promptly, regardless of financial challenges.

Directive to deposit the collected Service Tax amount:
Based on the findings regarding the appellant's financial situation and the non-deposit of the collected Service Tax amount, the Tribunal directed the appellant to deposit the entire amount of Rs.2.25 Crores within eight weeks from the judgment date. The compliance was to be reported before the Deputy Registrar, with further proceedings scheduled for confirmation. The directive aimed to ensure the timely deposit of the collected Service Tax amount by the appellant.

Application for waiver of pre-deposit of balance amounts:
The judgment allowed the application for waiver of pre-deposit of balance amounts involved, subject to the compliance of depositing the collected Service Tax amount within the specified timeframe. The stay on the recovery of the balance amounts was granted pending the disposal of the appeal, contingent on the appellant's compliance with the directive to deposit the collected Service Tax amount.

In summary, the judgment addressed the Service Tax liability on the entire contract amount under construction services, the appellant's non-deposit of collected Service Tax, the claimed financial difficulties, the directive to deposit the collected amount, the application for waiver of pre-deposit, and the stay on recovery pending appeal disposal. The Tribunal emphasized the importance of promptly depositing any collected Service Tax liability with the Government, regardless of financial challenges, and issued a specific directive for the appellant to comply with the deposit requirement within a specified timeframe.

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