2016 (5) TMI 1000 - AT - Service Tax

Waiver of pre-deposit - Demand of Service tax - Errection, commissioning and installation service (65 (105) (zzd) of Finance Act, 1994 - Non-eligibility for abatement under Notification No. 1/2006 inasmuch as it did not supply any plant, machinery or equipment nor had it erected, commissioned or installed such plant, machinery or equipment - Held that - col.3 of the table appended to Notification No. 1/2006-ST providing for 67%, covers erection commissioning or installation under a contract for supplying a plant, machinery equipment and also erection, commissioning or installation of such plant, machinery or equipment. Thus, it covers erection, commissioning or installation of plant machinery and equipment even if not supplied by the service provider and 67% abatement will be available if the value of such plant/machinery equipment is included in the assessable value in accordance with Col.4. It is seen prima facie the appellant s contention gains traction that the insulation becomes part of the equipment in asmuch as without such insulation the plant or machinery or equipment cannot function and that is the reason why as per column 4 not only value of plant, machinery or equipment but also value of parts and other material sold is to be included in the assessable value for the purpose of abatement. In addition, prima facie the appellant s contention that the demand is time barred because there was no willful misstatement of suppression of facts and the appellant had included the value of the material in the assessable value before claiming abatement is not without basis. Thus, prima facie, the appellant has a fairly strong case in its favour and therefore deserves complete waiver of pre-deposit. - Decided in favour of appellant

Summary

Issues:
1. Interpretation of Notification No.1/2006-ST regarding abatement eligibility for erection, commissioning, and installation service.
2. Whether the appellant qualifies for abatement under the notification.
3. Time-barred demand and willful misstatement or suppression of facts.

Analysis:
1. The case involved a dispute over the applicability of abatement under Notification No.1/2006-ST for service tax demand related to erection, commissioning, and installation service. The appellant contested that thermal insulation should be considered part of the service, while the Department argued that abatement is only applicable when there is a supply of plant, machinery, or equipment.

2. The Tribunal examined the provisions of the notification and noted that while the Department's argument seemed plausible due to the absence of supply, a closer look revealed that the notification covers erection, commissioning, or installation of plant machinery and equipment even if not supplied by the service provider. The Tribunal found merit in the appellant's argument that insulation is integral for the functioning of equipment, as indicated in the notification's assessment value inclusion criteria. The Tribunal acknowledged the appellant's strong case and granted a complete waiver of pre-deposit, staying the recovery of liabilities during the appeal.

3. Additionally, the Tribunal considered the appellant's assertion of the demand being time-barred due to the absence of willful misstatement or suppression of facts. The appellant had included the material value in the assessable amount before claiming abatement, indicating compliance. The Tribunal found the appellant's argument reasonable, further supporting the decision to grant a complete waiver of pre-deposit and stay the recovery of liabilities.