2015 (11) TMI 561 - AT - Service Tax

Tribunal upholds service tax demand against electrical contractor, orders pre-deposit. Exemption claim acknowledged.

M/s. Ajay Machine Tools Versus C.C.E. & S.T., Rohtak

The tribunal upheld the confirmation of service tax demand under Management, Maintenance or Repair Service (MMR) against the appellant, an electrical ... Waiver of pre deposit - Management, Maintenance or Repair Service - benefit of Notification No.12/2003-ST - Held that:- Primary adjudicating authority taking recourse to Section 65A of the Act has come to a finding that the service rendered did not fall under the scope of CICS but under MMR. The appellant did not submit ST-3 returns and in spite of repeated reminders, it did not submit the required documents either. Consequently, the Commissioner resorted to the best judgement assessment. We, however, notice that the Commissioner has not given any basis for arriving at 25% mark up for the purpose of best judgement. On the other hand, the appellant has contended that the actual figures during the period 2010-11 relating to rendition of service were lower than in the preceding financial year. It is also contended that several components of the service rendered were not taxable. However, we notice that the appellant has not given any evidence to that effect in the form of various contracts under which the service was rendered in support of its contention regarding non-taxability of its service. However, there is force in the contention of the appellant that it was entitled to the benefit of Notification No.12/2003-ST. - pre-deposit of 50% of the adjudicated service tax liability along with proportionate interest would meet the requirement of Section 35F of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994 and we accordingly order. - Partial stay granted. Issues:1. Confirmation of service tax demand under Management, Maintenance or Repair Service (MMR).2. Applicability of best judgement assessment under Section 72.3. Claim of exemption under Section 98 of the Finance Act, 2012.4. Classification of service under Commerce or Industrial Construction Service (CICS).5. Benefit entitlement under Notification No.12/2003-ST.Confirmation of service tax demand under MMR:The appellant, an electrical contractor, appealed against the confirmation of service tax demand of Rs. 50,31,853 for the period 01.04.2010 to 31.03.2011 under Management, Maintenance or Repair Service (MMR). The adjudicating authority confirmed the demand as the appellant provided the service but did not pay the service tax. The authority also conducted a best judgement assessment under Section 72 due to the appellant's failure to submit ST-3 returns.Applicability of best judgement assessment under Section 72:The appellant argued that the best judgement assessment was incorrect as the value of the service rendered was lower than the preceding year, and certain components of the service were not taxable. However, the appellant failed to provide evidence supporting these claims. The appellant contended that the service should be classified under Commerce or Industrial Construction Service (CICS) and claimed entitlement to the benefit of Notification No.12/2003-ST.Claim of exemption under Section 98 of the Finance Act, 2012:The appellant contended confusion regarding the taxability of repair and maintenance services for non-commercial Govt. buildings, which were retrospectively exempted from service tax under Section 98 of the Finance Act, 2012. The appellant believed in good faith that service tax was not leviable in this context.Classification of service under CICS:The appellant argued that the service, although not for commerce or industry buildings, should be classified under Commerce or Industrial Construction Service (CICS). However, the appellant failed to provide evidence supporting this classification.Benefit entitlement under Notification No.12/2003-ST:The appellant claimed entitlement to the benefit of Notification No.12/2003-ST, which had not been extended. The tribunal acknowledged the appellant's entitlement to this benefit.In conclusion, the tribunal ordered the appellant to make a pre-deposit of 50% of the adjudicated service tax liability along with proportionate interest within eight weeks. The recovery of the remaining adjudicated liabilities was stayed during the appeal's pendency, subject to compliance. Failure to make the pre-deposit would result in the dismissal of the appeal.