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of <h1>Tribunal upholds service tax demand for utility charges & consultancy services, sets pre-deposit amount & stays recovery</h1> <h3>M/s Ozone Projects Pvt Ltd Versus Commissioner of Service Tax, Chennai</h3> The tribunal upheld the service tax demand for utility charges and technical consultancy services under the reverse charge mechanism. It also supported ... Waiver of pre deposit - CENVAT Credit - reverse charge mechanism - technical consultancy service received from abroad - Held that:- Examining the taxability and non-taxability, it transpires that the advance returned not being taxable, for the time being the interest demand may not be enforceable. Similarly, utility service charges received being payable to the respective authorities providing such service, there may not be enforceable demand for the time being. So far as reverse charge mechanism applicable in respect of demand of ₹ 34,292/- is concerned, that is good demand for recovery at present. Similarly, the CENVAT credit wrongly availed appears to be a credible ground for Revenue for recovery at this stage. Thirdly, the interest paid for default period for payment of service tax to the extent of ₹ 23,31,736/- is also a good demand for recovery at present. - Partial stay granted. Issues involved:1. Service tax demand for utility charges and technical consultancy service2. CENVAT credit utilization demand3. Interest demands for various reasonsAnalysis:Issue 1: Service tax demand for utility charges and technical consultancy serviceThe appellant argued that charges collected for utility services were paid to the service providers, thus no service was provided by the appellant, making the service tax demand of Rs. 1,06,02,997 not enforceable. Additionally, a demand of Rs. 34,292 related to reverse charge mechanism for technical consultancy services from abroad. The appellant agreed to address these issues in detail during the regular hearing. The tribunal found the demand related to reverse charge mechanism to be valid for recovery at present.Issue 2: CENVAT credit utilization demandA demand of Rs. 6,76,416 was raised regarding the utilization of CENVAT credit, contested by the appellant for thorough examination during the regular hearing. The tribunal acknowledged the department's claim that the credit was wrongly utilized, indicating a credible ground for recovery at this stage.Issue 3: Interest demands for various reasonsInterest demands included Rs. 2,54,01,493 for no service tax due to advanced customer payments being returned, deemed unenforceable. Another demand of Rs. 23,31,736 was for delayed filing of returns, to be contested by the appellant during the appeal hearing. Additionally, a demand of Rs. 24,931 was raised for wrongly availing CENVAT credit, related to the larger CENVAT credit issue. The tribunal found the interest paid for default payment of service tax to be a valid demand for recovery at present.In conclusion, after considering the taxability aspects and non-taxability of certain items, the tribunal directed the appellant to pre-deposit Rs. 30,00,000 within four weeks. Upon compliance, the pre-deposit of the balance dues would be waived, and recovery stayed during the appeal process.
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