2014 (2) TMI 245 - AT - Service Tax

Tribunal grants delay due to medical reasons, orders Rs.15,00,000 pre-deposit

The Tribunal allowed the condonation of delay application due to medical reasons and directed the appellant to make a pre-deposit of Rs.15,00,000 against ... Condonation of delay - medical grounds for condonation - pre-deposit for waiver and stay of adjudged demand - classification of services: commercial/industrial construction service versus works contract - penal liability arising from admitted tax defaultCondonation of delay - medical grounds for condonation - Application for condonation of delay of 46 days in filing the appeal on medical grounds - HELD THAT: - The appellant received the impugned order on 18.6.2012 and filed the appeal on 31.10.2012, resulting in a delay of 46 days. The appellant placed on record a medical certificate and the treating doctor's prescription showing diabetes and hypertension and advising rest and monitoring from 4.9.2012. The Revenue raised objections to the medical certificate, but after considering submissions the Tribunal accepted the medical ground as sufficient to justify the delay. Consequently the application for condonation was allowed. [Paras 1]Condonation of the 46 day delay allowed on medical grounds; the application for condonation is allowed.Pre-deposit for waiver and stay of adjudged demand - classification of services: commercial/industrial construction service versus works contract - penal liability arising from admitted tax default - Application for waiver and stay of adjudged dues and the quantum of pre-deposit to be directed - HELD THAT: - The dispute concerned demand for service tax and education cesses for the period April 2006 to March 2010 classified as commercial/industrial construction service; the appellant contended the activity was works contract and admitted liability of about Rs.10.5 lakhs for the period from 1.6.2007, offering to pre deposit. The Revenue urged full pre deposit on the basis that the classification could not be changed midway during a single contract. The Tribunal observed that the appellant had admitted part of the tax liability and also incurred an irrefutable penal liability for non payment during the material period, and therefore must make a reasonable pre deposit covering tax and penal liability. Balancing these considerations the Tribunal directed a pre deposit of Rs.15,00,000 to be made within six weeks and ordered that, subject to compliance, waiver and stay would apply to the balance dues. [Paras 2, 3]Appellant directed to pre deposit Rs.15,00,000 within six weeks; upon compliance there will be waiver and stay of the remaining adjudged amount.Final Conclusion: The Tribunal allowed the condonation application on medical grounds and directed the appellant to pre deposit Rs.15,00,000 within six weeks; subject to such pre deposit, waiver and stay of the balance adjudged dues were ordered. Issues:1. Condonation of delay in filing the appeal due to medical reasons2. Liability to pay service tax under commercial or industrial construction service---Issue 1: Condonation of delay in filing the appeal due to medical reasonsThe appellant sought condonation of a 46-day delay in filing their appeal, citing medical reasons. The delay was attributed to the appellant's health conditions, specifically diabetes and hypertension, which required rest for observation and monitoring as per a doctor's advice. The medical certificate and prescription for medicines were submitted as evidence. The Additional Commissioner raised objections regarding the medical certificate, but the Tribunal accepted the medical ground for the delay. Consequently, the condonation of delay application was allowed.---Issue 2: Liability to pay service tax under commercial or industrial construction serviceThe appellant contended that the activity undertaken by them constituted a works contract, not commercial or industrial construction service, and thus, they were not liable to pay service tax under the latter category for the period before 1.6.2007. The appellant acknowledged a tax liability of Rs.10.5 lakhs from 1.6.2007 onwards and offered to pre-deposit this amount with interest. However, the Additional Commissioner argued that the entire adjudged dues, including Rs.27,47,027 demanded, should be pre-deposited as the appellant provided industrial/commercial construction service throughout the dispute period. The Tribunal held that the appellant should make a reasonable pre-deposit of Rs.15,00,000 against both tax and penal liability within six weeks. Compliance was to be reported to the Deputy Registrar by a specified date, with waiver and stay granted for the remaining dues upon due compliance.--- In conclusion, the Tribunal allowed the condonation of delay application due to medical reasons and directed the appellant to make a pre-deposit of Rs.15,00,000 against their tax and penal liabilities within a specified timeframe. Compliance with this directive would result in waiver and stay for the remaining dues.