2014 (12) TMI 742 - AT - Service Tax

Penalty u/s 76 - Consulting engineering service and construction services - Held that - construction of bus terminal is an activity which may not be liable to tax at all and hostel construction also may not be liable. In view of the above, we consider that the amount deposited by the appellants is sufficient for hearing the appeal. Accordingly, there shall be waiver of pre-deposit of balance dues and stay against recovery for a period of 180 days. - Stay granted.

Summary

Issues:
1. Liability to pay interest on delayed payment of service tax.
2. Tax liability on construction of commercial complex and technical consultancy services.

Analysis:
1. The case involved the appellants, engaged in consulting engineering and construction services, who had paid service tax after due dates resulting in a demand for interest. The show-cause notice demanded service tax, interest, and penalty under Section 76 of the Finance Act, 1994. The proceedings led to the confirmation of a service tax demand of &8377; 29,20,616. The appellants had not paid the interest amount yet.

2. The first issue focused on the construction of a commercial complex, with approximately &8377; 7 lakhs tax involved. The appellants argued that the construction of a bus terminal for KSRTC should be excluded from tax liability under the definition of 'commercial and industrial construction services.' The second issue involved a tax liability of &8377; 22 lakhs for technical consultancy services related to building a school and hostel. The department contended it was for technical consultancy, but the appellants claimed there was no consultancy involved.

3. The tribunal found merit in the appellants' arguments that the construction of a bus terminal and hostel might not be taxable activities. Considering this, the tribunal deemed the amount already deposited by the appellants sufficient for the appeal hearing. Consequently, the tribunal waived the pre-deposit of the balance dues and granted a stay against recovery for 180 days. The operative part of the order was pronounced in open court, providing relief to the appellants in terms of the waiver and stay against recovery.