2014 (6) TMI 694 - AT - Service Tax

Waiver of pre-deposit of Service Tax - Classification of service - Works contract service or Site formation service - Excavation and Earth Moving, Demolition Service, cutting down trees, construction of structure etc. - Held that - Applicant had initially not disputed the classification of the services rendered under the category of site formation service but expressed their inability to discharge the service tax being not reimbursed by the service receiver viz. M/s. Brahmaputra Cracker and Polymer Ltd. Prima facie, on scrutiny of the work order enclosed with the appeal memorandum, we find that the applicants are providing the services relating to earth filling, cutting of trees alongwith the services of raising of RCC structures etc. At this stage, it would be difficult to come to a conclusion whether the said services would fall under the scope of works contract service or site formation service without appreciation of evidences adduced by both sides as these services had been rendered against a common work order - stay granted partly.

Summary

Issues:
Waiver of pre-deposit of Service Tax, Penalty under Section 78, Classification of services as works contract or site formation service.

Waiver of Pre-deposit of Service Tax and Penalty:
The application sought the waiver of pre-deposit of Service Tax amounting to Rs.1.71 Crores and an equal amount of penalty imposed under Section 78, along with penalties under other provisions of the Finance Act, 1994. The appellant contended that they had rendered services falling under the category of works contract during the relevant period. Initially, they had mistakenly classified the services as 'site formation services' due to non-reimbursement by the service receiver. The appellant had already deposited Rs.23.19 Lakhs and offered to deposit an additional Rs.15.00 Lakhs. The Tribunal found the amount offered to be reasonable, directing the appellant to deposit the additional amount within eight weeks. Upon compliance, the balance dues would be waived, and recovery stayed during the appeal's pendency.

Classification of Services - Works Contract vs. Site Formation Service:
The Revenue contended that the majority of the demand related to 'site formation service' rather than civil construction or works contract service. The Tribunal observed that the appellant had initially not disputed the classification of services as 'site formation service' but had expressed inability to discharge the service tax due to non-reimbursement by the service receiver. Upon scrutiny of the work order and services provided, which included earth filling, cutting of trees, and construction of structures, the Tribunal found it challenging to conclusively determine whether the services fell under works contract or site formation service without further evidence. The Tribunal noted the amount already deposited by the appellant and the additional amount offered, deeming it reasonable. The appellant was directed to deposit the additional amount, with non-compliance leading to dismissal of the appeal without further notice.

This judgment addressed the issues of waiver of pre-deposit of Service Tax and penalty, as well as the classification of services as works contract or site formation service, providing detailed analysis and directives based on the submissions and evidence presented by the parties involved.