2014 (8) TMI 825 - AT - Service Tax

Waiver of predeposit of service tax - overlapping of demand - it was argued that there has been overlapping of demand relating to show-cause notice issued to them from their Jamshedpur Unit and the present one issued for the Joda Unit - Penalty u/s 76, 77 & 78 - repair and maintenance services - Held that - Commissioner has recorded the reason in arriving at the liability of the Applicant for their Joda Unit. At this stage, it would be difficult to accept the claim of the Applicant that there is an overlapping demand. Various correspondences were made with the Applicant prior to issuance of show-cause notice in ascertaining the liability. Thus the claim that there is overlapping of demand, at this stage, rest on appreciation of evidences. In these circumstances, the balance of convenience is in favour of the Revenue. No financial hardship has been pleaded nor substantiated by the Applicant - Partial stay granted.

Summary

Issues: Application for waiver of predeposit of service tax and penalties

Analysis:
1. The applicant sought waiver of predeposit of service tax amounting to Rs. 3.75 Crores and penalties imposed under Sections 76, 77, and 78 of the Finance Act, 1994. The representative argued that the demand was for repair and maintenance services rendered over a period of five and a half years, with an alleged excess tax amount of approximately Rs. 22.00 lakhs. It was contended that the demand computation was flawed, as major portions were already paid from another unit. However, it was acknowledged that no reply was submitted to the show-cause notice, and the issue of overlapping demands was not raised during the initial adjudication.

2. The Revenue's representative highlighted that the demand was based on documents submitted by the applicant, and the Commissioner had made specific observations regarding the computation of demand and the applicability of service tax. The Commissioner had requested relevant details multiple times, but not all information was provided by the applicant. The Commissioner's order confirmed the liability of the applicant for services rendered from their Joda Unit.

3. The Tribunal found no dispute regarding the taxable nature of the repair and maintenance services provided by the applicant from their Joda Unit. The main contention raised by the applicant was the alleged overlapping of demands between the Jamshedpur and Joda Units. The Revenue argued that the applicant had sufficient opportunities to present details but failed to do so, and the Commissioner's order was based on thorough examination of profit and loss accounts, invoices, and work orders. The Tribunal observed that the claim of overlapping demands required further evidence appreciation and, at that stage, favored the Revenue's stance. Considering the circumstances and legal principles, the Tribunal directed the applicant to deposit 25% of the service tax amount within eight weeks, failing which the appeal would be dismissed.

4. The Tribunal's decision was based on the lack of evidence supporting the claim of overlapping demands, the Revenue's diligent efforts to ascertain liabilities, and the absence of demonstrated financial hardship by the applicant. The order aimed to balance the interests of the Revenue while providing a reasonable opportunity for the applicant to comply with the deposit requirement to stay the recovery of the remaining dues during the appeal's pendency.