2014 (12) TMI 371 - AT - Service Tax

Tribunal Allows Partial Pre-Deposit, Grants Waiver and Stay for Service Tax Dispute

FUTURA TECHNOLOGICAL SERVICES Versus CCE., VISAKHAPATNAM

The Tribunal allowed pre-deposit of approximately 10.5 Lakhs towards the demand for service tax and penalties, finding no prima facie case against the ... Waiver of pre deposit - Site formation and clearance, excavation and earth moving and demolition service - Suppression of facts - Penalty u/s 77 & 78 - Held that:- On a careful perusal of the two work orders and on examination of the definition of “site formation and clearance service”, we are inclined to take the prima facie view that the transportation of earth excavated from one part of a large area (site for power plant to be set up by Reliance) to another part of the area for the purpose of filling/levelling was also a part of “site formation and clearance service” which includes “earth moving” also. We take this view, considering the totality of the work awarded to the appellant by Reliance. However, the tax paid by Reliance for transportation of earth can be counted as pre-deposit by the appellant towards the demand raised under site formation and clearance service. Moreover, we have found prima facie case for the appellant against the demand for the extended period of limitation. In the circumstances, the service tax and education cesses demanded under site formation and clearance service for the normal period have to be pre-deposited by the appellant and the same have been estimated at around 10.5 Lakhs. - Partial stay granted. Issues:1. Waiver and stay against adjudged dues including service tax, penalties under Sections 78 and 77 of the Finance Act, 1994.2. Dispute over service tax demand related to site formation and clearance service.3. Demand related to construction of Yanam Obelisk Tower.4. Issue of revenue neutrality in construction of Jack Well for SEZ Unit.5. Demand on activities at an onshore gas terminal.6. Pre-deposit amount and compliance deadline.Analysis:1. Waiver and stay against adjudged dues:The appellant sought waiver and stay against the adjudged dues, including service tax and penalties. The period of dispute was 2007-08 to 2010-11, with a significant amount demanded towards service tax and penalties. The appellant argued against the demand, emphasizing limitations and the understanding that the service tax liability on transportation of earth was to be borne by the service recipient under the reverse charge mechanism. The Tribunal found no prima facie case against the demand for the normal period but allowed pre-deposit of approximately 10.5 Lakhs towards the demand.2. Dispute over service tax demand - site formation and clearance service:A major part of the disputed demand was under the head of 'site formation and clearance service.' The appellant contested the demand related to transportation of earth, arguing that it was a separate contract from the site formation and clearance service. However, the Tribunal, after examining the work orders and definitions, held that transportation of earth was integral to the site formation and clearance service. The tax paid by the service recipient was considered as pre-deposit towards the demand, and the appellant was directed to pre-deposit the remaining amount.3. Construction of Yanam Obelisk Tower:The demand pertaining to the construction of Yanam Obelisk Tower was not in dispute, as the appellant had already paid the service tax amount. This part of the demand did not require further action.4. Revenue neutrality in construction of Jack Well for SEZ Unit:Regarding the construction of Jack Well for the SEZ Unit, the Tribunal accepted the argument of revenue neutrality, as any service tax paid would be available as a refund to the SEZ Unit. Consequently, waiver and stay were granted against this particular demand.5. Demand on activities at an onshore gas terminal:The demand on activities at the onshore gas terminal was discussed in connection with a larger appeal filed by another party. The Tribunal directed the appellant to pre-deposit a certain percentage of the demand amount, considering the ongoing appeal and the pre-deposit requirements set by the Tribunal in a related case.6. Pre-deposit amount and compliance deadline:In conclusion, the Tribunal directed the appellant to pre-deposit a specific amount within a set deadline. Compliance with this directive would result in a waiver and stay against the remaining dues, including penalties, as per the operative portion of the order pronounced in open court.