Tribunal orders cooperative society to pay Rs. 15.00 Lakhs within 8 weeks to halt recovery

The tribunal directed the cooperative society to deposit Rs. 15.00 Lakhs in addition to the Rs. 5.00 Lakhs already paid within eight weeks. Upon this deposit, the balance dues would be waived, and recovery stayed during the appeal's pendency, with a compliance report due by 28/08/2014. Failure to comply would result in dismissal of the appeal without further notice.

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Issues:
Waiver of pre-deposit of Service Tax and penalties under various sections of the Finance Act, 1994.

Analysis:
The applicant, a cooperative society providing manpower services to a thermal project, sought waiver of pre-deposit of Service Tax amounting to Rs. 1.18 crores along with penalties imposed under different sections of the Finance Act, 1994. The applicant argued that since the main contractors had already paid service tax on the total project cost, including the value of labor supplied by the applicant, no separate service tax liability should apply to them. However, the Revenue contended that the services provided by the applicant as a sub-contractor were distinct from those provided by the main contractors, and hence, the applicant couldn't be absolved of the service tax liability. The tribunal noted that the service tax demand was raised on the applicant for supplying manpower to service receivers involved in construction services for the thermal project. The tribunal agreed with the Revenue's stance that the service tax paid by the main contractors for construction services couldn't discharge the applicant's liability for manpower supply services. The tribunal highlighted the CENVAT Credit mechanism to avoid double taxation, emphasizing that the service receiver could take credit for service tax paid on manpower supply only if it was used in providing construction services. Consequently, the tribunal directed the applicant, a cooperative society operating on a non-profit basis, to deposit Rs. 15.00 Lakhs in addition to the Rs. 5.00 Lakhs already paid within eight weeks. Upon this deposit, the balance dues would be waived, and recovery stayed during the appeal's pendency, with a compliance report due by 28/08/2014. Failure to comply would result in dismissal of the appeal without further notice.

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