2014 (6) TMI 694 - AT - Service Tax

Appellant must deposit additional amount within 8 weeks to resolve Service Tax dispute.

The Tribunal directed the appellant to deposit an additional amount within eight weeks to waive the balance dues of Service Tax and penalty. The ... Pre-deposit for stay of appeal - stay of recovery on deposit - partial deposit as condition for waiver of balance - classification of services: site formation service vis-a -vis works contract or civil construction - penalty under Section 78 and other penaltiesPre-deposit for stay of appeal - partial deposit as condition for waiver of balance - stay of recovery on deposit - Whether pre-deposit ought to be waived or modified and whether recovery should be stayed pending the appeal - HELD THAT: - The Tribunal, after hearing the parties and perusing the record, found on a prima facie view that the appellant had already deposited a portion of the demand and offered to deposit an additional sum. On scrutiny of the work order and submissions, the Tribunal considered the additional offer reasonable. Accordingly, the Tribunal directed the appellant to deposit the offered amount of Rs.15.00 Lakhs within eight weeks and ordered that on deposit of that amount the balance of the adjudged dues would stand waived and recovery thereof stayed during the pendency of the appeal. The Tribunal also recorded that failure to make the deposit would result in dismissal of the appeal without further notice. The order operates as a conditional waiver of the pre-deposit and grants stay of recovery subject to the specified deposit being made within the time directed.Appellant directed to deposit Rs.15.00 Lakhs within eight weeks; on such deposit balance adjudged dues waived and recovery stayed during pendency of appeal; failure to deposit will result in dismissal of the appeal.Classification of services: site formation service vis-a -vis works contract or civil construction - Classification of the services rendered by the appellant was not finally determined and requires appreciation of evidence - HELD THAT: - The Tribunal noted that the appellant had initially not disputed classification as site formation service but later contested matters of reimbursement; the Department had confirmed the demand primarily as site formation service. On prima facie scrutiny the work order indicated a mix of activities including earth filling, cutting of trees and raising of RCC structures. Because these activities arise under a common work order, the Tribunal found it difficult to conclude whether the services fall within works contract/civil construction or site formation service without appraisal of evidence tendered by both sides. The question of classification therefore remains for determination on the evidence in the appeal and was not decided on merits by the Tribunal in this order.Classification not adjudicated on merits; requires fresh appreciation of evidence in appeal.Final Conclusion: The Tribunal granted conditional relief by directing deposit of the additional sum offered (Rs.15.00 Lakhs) within eight weeks, upon which the balance adjudged dues are waived and recovery is stayed during the appeal; the substantive question of whether the services constitute site formation service or fall within works contract/civil construction was not finally decided and must be determined on appreciation of evidence in the appeal. Issues:Waiver of pre-deposit of Service Tax, Penalty under Section 78, Classification of services as works contract or site formation service.Waiver of Pre-deposit of Service Tax and Penalty:The application sought the waiver of pre-deposit of Service Tax amounting to Rs.1.71 Crores and an equal amount of penalty imposed under Section 78, along with penalties under other provisions of the Finance Act, 1994. The appellant contended that they had rendered services falling under the category of works contract during the relevant period. Initially, they had mistakenly classified the services as 'site formation services' due to non-reimbursement by the service receiver. The appellant had already deposited Rs.23.19 Lakhs and offered to deposit an additional Rs.15.00 Lakhs. The Tribunal found the amount offered to be reasonable, directing the appellant to deposit the additional amount within eight weeks. Upon compliance, the balance dues would be waived, and recovery stayed during the appeal's pendency.Classification of Services - Works Contract vs. Site Formation Service:The Revenue contended that the majority of the demand related to 'site formation service' rather than civil construction or works contract service. The Tribunal observed that the appellant had initially not disputed the classification of services as 'site formation service' but had expressed inability to discharge the service tax due to non-reimbursement by the service receiver. Upon scrutiny of the work order and services provided, which included earth filling, cutting of trees, and construction of structures, the Tribunal found it challenging to conclusively determine whether the services fell under works contract or site formation service without further evidence. The Tribunal noted the amount already deposited by the appellant and the additional amount offered, deeming it reasonable. The appellant was directed to deposit the additional amount, with non-compliance leading to dismissal of the appeal without further notice.This judgment addressed the issues of waiver of pre-deposit of Service Tax and penalty, as well as the classification of services as works contract or site formation service, providing detailed analysis and directives based on the submissions and evidence presented by the parties involved.