2015 (12) TMI 1217 - AT - Service Tax

Dispute over tax abatement in construction contract leads to waiver of pre-deposit

M/s Larsen & Toubro Ltd. Versus Commissioner of Service Tax, Chennai

The appellant argued that the work was done using material and paid tax based on the abatement formula, indicating no further liability. The Revenue ... Waiver of pre deposit - Erection, Commissioning and installation service - doubt was whether the abatement were genuinely claimed - Held that:- Prima facie, there were four contracts executed by the appellant. But contract-wise discussion is absent in the Adjudication order to appreciate the quantum of goods if any used in each contract. Learned Adjudicating authority in para 12.1 of the order has recorded that there was a claim of abatement. But his only doubt was whether the abatement were genuinely claimed and benefit of the notification by the appellant was appropriate. Appellant failed to satisfy the authority on this aspect. However, prima facie making overall assessment of the fact situation and denial of abatement not being on sound reasoning, there shall be waiver of pre-deposit during pendency of the appeal. - Stay granted. Issues:1. Appellant's submission regarding the material used in the work and compliance with abatement formula.2. Revenue's argument against allowing concession in pre-deposit based on the nature of the contract.3. Lack of contract-wise discussion in the Adjudication order.4. Evaluation of the claim of abatement and waiver of pre-deposit during the appeal.Analysis:1. The appellant contended that the work was executed with material and that the amount of material used was calculated using the abatement formula from Notification No.1/2006-ST. The appellant paid tax on 33% of the contract value based on this formula, indicating no further liability.2. The Revenue, however, argued that in a contract for Erection, Commissioning, and Installation, the use of goods is not conceivable, thus opposing any concession in pre-deposit.3. Upon hearing both sides and examining the records, it was noted that there were four contracts executed by the appellant, but the Adjudication order lacked a detailed discussion on each contract to determine the quantity of goods used. The Adjudicating authority expressed doubts regarding the genuineness of the abatement claimed by the appellant and the appropriateness of the notification's benefits.4. Despite the appellant's failure to fully satisfy the authority on the abatement claim, a prima facie assessment of the situation revealed a lack of sound reasoning for denying abatement. Consequently, during the appeal's pendency, the waiver of pre-deposit was granted based on the overall evaluation of the facts and the absence of detailed contract-wise analysis in the Adjudication order.