Pre-deposit in works contract service tax dispute ordered where hardship was not shown and balance favoured Revenue.

In a pending service tax appeal on inclusion of contractee-supplied goods in the taxable value of works contract service, CESTAT directed a pre-deposit and granted only partial waiver. The Tribunal noted that the Revenue had succeeded in an earlier Tribunal ruling on the same valuation issue and that the matter was pending before the High Court; it also referred to the relevant valuation and exemption notifications. Finding the balance of convenience in favour of the Revenue and no showing of undue or financial hardship, it ordered deposit of Rs. 2 crores within eight weeks while waiving the remaining demand during the appeal, subject to compliance.

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Issues: Whether, in the pending service tax appeal, the appellant should be directed to make a pre-deposit and whether waiver of the remaining demand should be granted during pendency of the appeal.

Analysis: The demand arose from inclusion of the value of goods/materials supplied by the contractee in the taxable value of works contract service. The Tribunal noted that the Revenue had succeeded in an earlier Tribunal decision on the same issue and that the matter was stated to be pending before the High Court. The adjudicating authority had also examined the relevant exemption/valuation notifications governing inclusion of material value. In these circumstances, the Tribunal found that the balance of convenience lay with the Revenue and that no material had been shown to establish undue or financial hardship justifying complete waiver.

Conclusion: The appellant was required to deposit Rs. 2 crores within eight weeks, and the remaining demand was waived during the pendency of the appeal subject to compliance with the pre-deposit direction.

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