2014 (10) TMI 241 - AT - Service Tax

Waiver of pre deposit - services provided in a SEZ by sub-contractor - benefit of notification no.9/2009-ST, dt. 03.03.2009 as amended by notification no.15/2009-ST, dt. 20.05.2009 - Held that - Appellant is a sub-contractor and the main contractor has provided services in relation to the contract executed in a special economic zone. We also find that the main contractor has given a certificate indicating that the appellant is a sub-contractor and has given the services which are consumed by the main contractor in a special economic zone. On perusal of notification no.09/2009-ST, we find that the said notification grants exemption to the services rendered in a special economic zone and does not distinguish between a contractor and sub-contractor. When there is no dispute as to the fact that the services are rendered to a unit in special economic zone, we find that appellant has made out a prima facie case of the waiver of the pre-deposit of the amounts involved - Stay granted.

Summary

Issues involved:
Waiver of pre-deposit of service tax liability, interest, and penalties for a sub-contractor in a special economic zone under notification no.9/2009-ST.

Analysis:
The judgment deals with a stay petition filed for the waiver of pre-deposit of a significant amount confirmed as service tax liability, interest, and penalties for the appellant, who is a sub-contractor. The adjudicating authority and the first appellate authority upheld the dues on the grounds that the appellant is not entitled to the benefit of notification no.9/2009-ST as amended. The main issue revolves around whether the appellant, as a sub-contractor, can avail the exemption granted for services rendered in a special economic zone under the said notification.

Upon hearing both parties and examining the records, the tribunal observed that the appellant is indeed a sub-contractor, and the main contractor has provided services related to a contract executed in a special economic zone. Notably, the main contractor certified that the appellant provided services consumed in the special economic zone. The tribunal emphasized that the notification granting exemption for services in a special economic zone does not differentiate between a contractor and a sub-contractor. Since there is no dispute regarding the services being rendered in a special economic zone, the tribunal found that the appellant established a prima facie case for the waiver of the pre-deposit.

The tribunal addressed the concerns raised by the Departmental Representative regarding whether the services provided by the appellant fall under authorized operations. It directed the appellant's counsel to produce the complete list of authorized operations approved by the SEZ authorities. The tribunal emphasized that the question of whether the services qualify as authorized operations can be considered during the final disposal of the appeal.

Consequently, the tribunal allowed the application for the waiver of the pre-deposit of the amounts involved and stayed the recovery until the appeal is disposed of. The judgment highlights the importance of establishing a prima facie case for the waiver of pre-deposit and the need to address specific concerns raised during the appeal process, such as the classification of services as authorized operations in a special economic zone.