2014 (10) TMI 766 - AT - Service Tax

Waiver of pre deposit - Classification of service - Interior decorator service or works contract service - Held that - interior decorator has to be a professional and has to advertise himself to the public that he is an interior decorator. From the bills and work orders produced, we do not find any such claim made by the appellant suggests that they are only undertaking interior works. Our attention also was drawn to one of the work orders wherein the work done by the appellant was certified by an interior decorator which also would show that the appellant may not be considered as an interior decorator. If they were considered to be so and their service was taken on that basis, Dell International, a customer in that case, would not require a certificate from interior decorator about the work done by the appellant. classification itself is debatable and the appellant seem to have a prima facie case to show that they are not interior decorators, the requirement of pre-deposit is waived and stay against recovery granted during the pendency of the appeal - Stay granted.

Issues Involved:
1. Applicability of abatement of 67% composition scheme for service tax.
2. Classification of the appellant as interior decorators for tax purposes.
3. Consideration of the appellant's claim as mainly carpenters.
4. Interpretation of the statutory definition of taxable service in relation to interior decorator service.
5. Evaluation of the evidence presented, including work orders and legal advice received by the appellant.
6. Determination of the need for pre-deposit and granting stay against recovery during the appeal process.

Issue 1: Applicability of Abatement of 67% Composition Scheme
The appellant registered as service providers of interior decorator service but paid tax as works contract from 2007 to 2011. The authorities denied the abatement of 67% composition scheme for this period, leading to duty demand confirmation and penalties. The tribunal found the classification debatable and granted a stay against recovery during the appeal, considering the appellant's prima facie case against being classified as interior decorators.

Issue 2: Classification of the Appellant as Interior Decorators
The appellant claimed they were mainly carpenters and not interior decorators due to incorrect legal advice. The tribunal analyzed the statutory definition of taxable service related to interior decorators, emphasizing the wide scope of services covered. It noted the absence of clear indications that the appellant advertised themselves as interior decorators or possessed the necessary qualifications. The tribunal found the issue debatable and waived the pre-deposit requirement, indicating a need for further examination during the final hearing.

Issue 3: Consideration of Appellant's Claim as Mainly Carpenters
The appellant's assertion of being primarily carpenters rather than interior decorators was considered in light of the legal advice they received. The tribunal acknowledged the lack of explicit claims by the appellant regarding their specialization as interior decorators and highlighted the need for a detailed assessment of work orders, legal advice, and other relevant aspects during the final hearing.

Issue 4: Interpretation of Statutory Definition of Taxable Service
The tribunal interpreted the statutory definition of taxable service in relation to interior decorator service, emphasizing that the phrase "in any other manner" widens the scope of services beyond specific fields. It concluded that even activities like furniture making and civil work could fall under this definition. The tribunal highlighted the complexity and debatability of the classification, indicating the need for a thorough examination of all relevant factors.

Issue 5: Evaluation of Evidence Presented
The tribunal considered the evidence presented, including work orders and legal advice, to determine the appellant's classification. It noted discrepancies in the appellant's portrayal as interior decorators and the lack of explicit professional claims in their documentation. The tribunal emphasized the need for a detailed examination of the evidence and qualifications of the individuals involved to reach a conclusive decision.

Issue 6: Determination of Pre-Deposit Requirement and Stay Against Recovery
Given the debatable nature of the classification and the appellant's prima facie case against being considered interior decorators, the tribunal waived the pre-deposit requirement and granted a stay against recovery during the appeal process. This decision was made to allow for a more comprehensive examination of the case during the final hearing.

This detailed analysis of the judgment highlights the key issues involved, the tribunal's considerations, and the decisions made regarding the classification of the appellant and the applicability of tax schemes.

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