2014 (4) TMI 1038 - AT - Service Tax

Demand of service tax - construction of Commercial or Industrial complexes and also Residential Complexes. - Held that - In the matter of free supply materials, there is already a decision of the Tribunal in favor of the assessee 2013 (9) TMI 294 - CESTAT NEW DELHI and the other disputed issue stands referred to a Larger Bench of the Tribunal. In the circumstances, we consider the deposit already made by the applicant is sufficient for admission of appeal and there shall be stay on collection of such dues till the disposal of the appeal - Stay granted.

Summary

Issues Involved:
1. Applicability of service tax on construction of complexes.
2. Claiming exemption under Notification No.1/2006-ST.
3. Commencement of works contract and tax liability.
4. Benefit of Works Contract Scheme before 01.06.2007.
5. Reference to Larger Bench on taxation of Works Contract pre-01.06.2007.
6. Sufficiency of deposit for admission of appeal.
7. Stay on collection of dues till appeal disposal.

Analysis:

1. The Applicant, engaged in constructing commercial and residential complexes, faced a demand for unpaid service tax for the period Apr. '06 to Sept. '10. The Revenue contended that the Applicant wrongly claimed exemption under Notification No.1/2006-ST due to the supply of materials by the service receiver. Additionally, the Applicant started paying service tax under Works Contract from 01.06.2007, leading to a Show Cause Notice (SCN) resulting in a tax demand of Rs.1,31,91,328/- along with interest and penalty. The Applicant had paid a partial amount of Rs.30,90,437/- towards the demand.

2. The Applicant appealed the order, arguing that the issue of availing abatement under Notification No.1/2006-ST in cases of material supply was settled by a Tribunal decision. They also highlighted that only two contracts commenced before 01.06.2006, with the rest starting after 01.06.2007. The Counsel referenced a CBEC Circular and the pending issue of taxing Works Contract pre-01.06.2007 before a Larger Bench. The Revenue representative cited the decision in Nagarjuna Construction Vs CCE.

3. The Tribunal acknowledged the contentious nature of both issues raised. Regarding free supply of materials, a favorable Tribunal decision existed, while the dispute on Works Contract taxation pre-01.06.2007 was referred to a Larger Bench. Considering the deposit made by the Applicant sufficient for appeal admission, the Tribunal granted a stay on the collection of dues until the appeal's disposal.

4. The judgment, delivered by Mathew John, granted the stay application, allowing the Applicant to proceed with the appeal without immediate collection of the outstanding tax amount. The decision was made based on the existing Tribunal ruling in favor of the Applicant on one issue and the reference to a Larger Bench for the other, indicating the complexity and significance of the legal questions involved in the case.