2017 (3) TMI 1415 - HC - Service Tax

Restoration of appeal - dismissal of appeal due to non-deposit of the outstanding service tax amount of ₹ 23,12,868/- within a period of eight weeks therefrom as pre-deposit - appellant submitted that the present pre-deposit requirement is 7.5% of the demand. The demand could not be said to be more than ₹ 23,12,868/- and, after the amendment, 7.5% of that could only be insisted upon as predeposit for the purposes of hearing of the appeal - Held that - the appellant was ready and willing to put in the deposit of 7.5% of ₹ 23,12,868/- as pre-deposit for the purposes of hearing of the appeal - appeal restored with direction upon the appellant to deposit 7.5% of ₹ 23,12,868/- being the sum of ₹ 1,73,465/- within two weeks - appeal allowed - decided partly in favor of assessee.

Summary

Issues:
1. Appeal against order of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) for restoration of appeal.
2. Demand of service tax on mobilization advance for civil and road construction.
3. Contention of the appellant regarding tax liability and classification of services.
4. Pre-deposit requirement for appeal before CESTAT.

Analysis:
1. The appeal was filed against the order of CESTAT dismissing a miscellaneous application for restoration of the appeal. The appellant contended that the pre-deposit requirement was 7.5% of the demand and was willing to deposit the amount for the appeal to be heard.
2. The Revenue demanded service tax on mobilization advance received by the assessee for civil and road construction. The appellant argued that part of the advance was for road construction, which is not taxable. However, the original order confirmed the demand, directing payment of the outstanding sum, interest, and penalties.
3. The appellant disputed the classification of services for tax purposes, arguing that construction of road work should not be taxable under the relevant sections of the Finance Act, 1994. The Tribunal directed the appellant to deposit the outstanding service tax amount as a pre-deposit for the appeal to proceed.
4. The Tribunal ordered the appellant to deposit 7.5% of the demanded amount within two weeks for the appeal to be heard on merits. Failure to comply would result in confirmation of the impugned order. Both parties agreed to the deposit and the direction for the appeal to proceed was given.

This judgment highlights the legal battle over service tax on mobilization advance for construction services, the classification of services for taxation purposes, and the pre-deposit requirements for appeals before the CESTAT. The decision ultimately favored the appellant, allowing the appeal to be heard upon the deposit of the specified amount, emphasizing compliance with legal procedures in tax matters.