Subcontracted service tax liability in composite tower supply led to interim stay and no further pre-deposit pending appeal.

Where a composite tower supply arrangement separately priced the supply of towers and the erection/commissioning service, and the service work was subcontracted to a contractor who had already paid service tax, the main contractor was treated prima facie as not itself providing the taxable service for stay purposes. On that basis, the tribunal granted interim protection, stayed recovery of the remaining adjudicated demand, and directed no further pre-deposit pending appeal. The claimed 67% abatement under Notification No. 1/2006-ST was treated as immaterial to interim relief in the circumstances, since the amount already paid was considered while assessing pre-deposit and recovery.

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Issues: (i) Whether the appellant was prima facie liable to service tax on the tower supply and the service component where the service portion was subcontracted and the subcontractor had discharged tax. (ii) Whether the appellant could claim 67% abatement under Notification No. 1/2006-ST and avoid further pre-deposit pending appeal.

Issue (i): Whether the appellant was prima facie liable to service tax on the tower supply and the service component where the service portion was subcontracted and the subcontractor had discharged tax.

Analysis: The purchase order showed separate consideration for supply of ground based towers and for the service component. On the facts presented, the appellant supplied the towers and outsourced the erection, commissioning and allied service work to a subcontractor who had paid service tax. In that setting, the appellant itself was treated as not having provided the taxable service for the purposes of the stay application.

Conclusion: The appellant was held prima facie not liable to pay service tax on the service component in these proceedings.

Issue (ii): Whether the appellant could claim 67% abatement under Notification No. 1/2006-ST and avoid further pre-deposit pending appeal.

Analysis: Since the appellant's tax payment was treated as a reversal of Cenvat credit to the extent of service tax already paid by the subcontractor, the question of abatement under Notification No. 1/2006-ST was treated as not material for the interim relief. The amount already remitted was also taken into account while considering pre-deposit and recovery.

Conclusion: No further pre-deposit was directed and recovery of the remaining adjudicated liability was stayed during pendency of the appeal.

Final Conclusion: Interim protection was granted to the appellant on a prima facie view, with recovery stayed and no additional pre-deposit ordered, while the appeal itself remained pending for final adjudication.

Ratio Decidendi: Where the taxable service portion of a composite arrangement is subcontracted and tax on that service is already discharged by the subcontractor, the main contractor may be granted interim relief on a prima facie view that its own service tax liability is not established for the purpose of pre-deposit and stay.

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