2016 (7) TMI 1031 - AT - Service Tax

Waiver of pre-deposit - Commercial or Industrial Construction Service (CICS) - Manpower Recruitment or Supply Agency Service - Maintenance and power backup expenses recovered from the clients in the form of fixed charges, operator charges, fuel consumption /running expenses. - Admissibility of Cenvat Credit - Held that - Having regarding to the foregoing discussion and keeping in mind that the appellant has also raised the issue of time bar, though that is contested by ld. Departmental Representative and elaborate discussion thereon can be done only at the time of final hearing, we are of the view that e pre-deposit of ₹ 50 lakhs would meet the requirement of Section 35F of Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994. - stay granted partly.

Issues:
1. Stay application against service tax demands confirmed under two Show Cause Notices.
2. Classification of services under Commercial or Industrial Construction Service (CICS), Manpower Recruitment or Supply Agency Service, Maintenance and power backup expenses, Payment of service tax prior to registration through CENVAT credit, and Inadmissible CENVAT credit of common input services.
3. Applicability of interest under Section 75 of the Finance Act, 1994.
4. Contention of wilful mis-statement/suppression affecting the demand as time-barred.

Analysis:

Issue 1: Stay Application Against Service Tax Demands
The appellant filed a stay application against the service tax demands confirmed under two Show Cause Notices. The demands totaled &8377; 4,70,66,218/- and &8377; 2,29,16,563/- respectively, along with interest and penalties.

Issue 2: Classification of Services
- *Commercial or Industrial Construction Service (CICS):* The appellant argued that construction work performed under Works Contract should not fall under CICS, and best judgement assessment lacked a sustainable ground.
- *Manpower Recruitment or Supply Agency Service:* The appellant contended they did not supply manpower but engaged individuals to ensure work compliance.
- *Maintenance and Power Backup Expenses:* The appellant argued that charges for power backup were not liable to service tax.
- *Payment of Service Tax through CENVAT Credit:* The appellant disputed the disallowance of CENVAT credit for the period prior to registration.
- *Inadmissible CENVAT Credit:* The appellant challenged the disallowance of CENVAT credit due to providing both taxable and exempted services.

Issue 3: Interest under Section 75
The appellant contested the interest charged under Section 75 of the Finance Act, 1994 for delayed service tax payment during a specific period.

Issue 4: Time-Barred Demand
The appellant claimed no wilful mis-statement/suppression, suggesting the demand might be time-barred.

The Tribunal analyzed each contention thoroughly. Regarding the classification of services, the Tribunal found merit in the appellant's arguments related to the nature of construction work and the applicability of certain services. For the demand under Manpower Recruitment or Supply Agency service, the Tribunal observed that the appellant provided skilled/semi-skilled workers to assist in execution, supporting the sustainability of the demand. However, the Tribunal acknowledged the appellant's concerns about the best judgement assessment in the second Show Cause Notice.

Regarding maintenance and power backup expenses, the Tribunal noted the lack of a service element in the charges for power backup, favoring the appellant's position. The Tribunal also considered the appellant's defense against the disallowed CENVAT credit and the interest charge for late payment, suggesting a valid ground for granting a stay.

In conclusion, the Tribunal ordered a pre-deposit of &8377; 50 lakhs within six weeks, considering the requirements of the relevant Acts. Compliance was to be reported by a specified date, with the remaining liabilities stayed pending the appeal. Failure to comply would result in dismissal of the appeal.

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