2013 (10) TMI 1112 - AT - Service Tax

Appellate Tribunal grants waiver for Service Tax liability in advance vs. loan case

M/s Radhika Construction Versus CCE Vadodara

The Appellate Tribunal CESTAT AHMEDABAD granted the appellant's Stay Petition seeking waiver of pre-deposit for a confirmed Service Tax liability, ... Construction services – nature of receipt - advance or loan - Waiver of Pre-deposit - Held that:- The issue involved in the case is taxability of the amount received as an advance and the TDS deducted by various authorities - major portion of the amount is regarding Service Tax liability on the amount received by the appellant as loan - M/s J.R. Construction has very clearly stated that the said amount is indicated in the books of account as Unsecured Loan - If that be so, prima facie, loans cannot be considered as amount received as an advance and taxable under the provisions of Finance Act, 1994 - the appellant’s, have made out a prima facie case for waiver of the pre-deposit of amounts involved - Accordingly, the application for waiver of pre-deposit of amounts involved is allowed and recovery stayed till the disposal of appeal – Stay granted. Issues involved:Taxability of amount received as an advance and TDS deducted by various authorities.Analysis:The judgment by the Appellate Tribunal CESTAT AHMEDABAD involved a Stay Petition seeking waiver of pre-deposit of a confirmed Service Tax liability, interest, and penalties under Sections 76, 77, and 78 of the Finance Act, 1994, amounting to Rs.1,71,963. The lower authorities confirmed the dues based on the appellant's receipt of Rs.10 lakhs from M/s J.R. Construction as an advance without discharging the Service Tax liability for Construction services. The issue revolved around the taxability of the advance received and the TDS deducted. The Tribunal noted that a significant portion of the amount was related to Service Tax liability on a loan received by the appellant from M/s J.R. Construction. Upon examining the records, it was found that M/s J.R. Construction classified the amount as an Unsecured Loan in their books of account. The Tribunal concluded that loans cannot be considered as advances taxable under the Finance Act, 1994, prima facie. Consequently, the appellant established a prima facie case for the waiver of the pre-deposit amounts. As a result, the application for waiver was granted, and the recovery was stayed pending the appeal's disposal. The judgment highlighted the distinction between loans and advances for tax purposes, providing relief to the appellant in this case.