2014 (7) TMI 583 - AT - Service Tax

Tribunal Grants Stay on Recovery Pending Appeal: Examining Service Tax Liability

The tribunal granted a stay on the recovery of remaining amounts pending appeal disposal, considering arguments, case laws, and the deposit made by the ... Waiver of pre deposit - Demand of service tax - Construction service - whether the commercial and industrial buildings constructed by the appellant for M/s GETCO (M/s Gujarat Energy Transmission Corporation Ltd.), M/s PGVCL (M/s Paschim Gujarat Vij Company Ltd.), M/s GTL Infra Ltd, M/s TPS Sikka (M/s Thermal Power Station, Sikka& Gandhinagar), M/s GSCSC (M/s Gujarat State Civil Supply Corporation) etc. will attract Service Tax - Held that:- Appellant is mainly undertaking the construction activities of Government projects which are either offices or the residential construction. The constructed buildings are not meant for commercial activities like making of shops etc. for letting out etc. as envisaged by the Revenue in CBEC Circulars relied upon by the appellant. The issues raised by the appellant are contentious one and need to be gone into in greater depths which can be done only at the time of final hearing. In view of the above and based on the case laws relied upon by the appellant an amount of ₹ 2,30,700/-, already paid by the appellant is considered as enough deposit for granting stay on the remaining amounts. It is accordingly ordered that there will be stay on recovery of the remaining amounts till the disposal of the appeal. - Stay granted. Issues involved:1. Whether construction activities for specific entities attract Service Tax.2. Whether services provided to a particular entity fall under taxable services.3. Liability of the appellant to pay Service Tax on commission earned by sub-contractors.Analysis:Issue 1: Construction activities for specific entities and Service Tax liabilityThe appellant filed a stay application against the order confirming a demand with penalties under various sections of the Finance Act, 1994. The primary contention was whether the construction activities undertaken for entities like M/s GETCO, M/s PGVCL, M/s GTL Infra Ltd, among others, would attract Service Tax liability. The appellant argued that the constructions were for government companies or residential purposes and should not incur Service Tax. Reference was made to case laws supporting the exemption of Service Tax on constructions for government entities. The tribunal acknowledged the contentious nature of the issues raised and noted that a detailed examination would be necessary during the final hearing. Considering the case laws cited and an amount already paid by the appellant, a stay was granted on the remaining amounts pending appeal disposal.Issue 2: Taxable services provided to a specific entityAnother aspect of the case revolved around services provided to M/s GSPHCL, specifically 'Residential Complex' and 'Construction of Complex Service.' The question was whether these services should be considered taxable under relevant sections of the Finance Act, 1994. The appellant's argument was based on the nature of constructions and the entities involved, emphasizing the non-commercial aspect of the projects. The tribunal, while granting the stay, did not delve into the specifics of this issue but highlighted the need for a thorough examination during the final hearing due to the complexity and significance of the matter.Issue 3: Liability for Service Tax on sub-contractors' commissionThe third issue pertained to the appellant's liability to pay Service Tax on the commission earned by their sub-contractors falling under 'Business Auxiliary Services.' The appellant's defense was centered on the nature of the constructions and the applicability of Service Tax based on previous case laws and circulars. The tribunal, while acknowledging the arguments presented, did not provide a detailed analysis in the stay order but indicated that a comprehensive review would be essential during the final hearing to address the complexities involved.In conclusion, the tribunal granted a stay on the recovery of the remaining amounts pending the appeal's disposal, considering the arguments, case laws, and the deposit made by the appellant. The detailed examination of the issues involved, especially regarding the Service Tax liability on specific constructions and services provided, was deemed necessary during the final hearing for a comprehensive resolution.