2016 (7) TMI 129 - AT - Service Tax

High Court rules in favor of construction service provider, citing works contract clarification. 67% abatement allowed.

M/s Ahluwalia Construction Group Versus CST, Delhi-I

M/s Ahluwalia Construction Group Versus CST, Delhi-I - TMI Issues:1. Consideration of contentions regarding service tax demand for construction service.2. Distinction between value of goods supplied and value of services rendered for service tax purposes.3. Applicability of works contract service and commercial or industrial construction service.4. Request for unconditional waiver of pre-deposit based on Supreme Court judgment.5. Dismissal of miscellaneous application for waiver of pre-deposit.Analysis:1. The judgment revolves around the consideration of contentions related to a service tax demand for construction service. The Hon'ble High Court's order highlighted that the demand was in contravention of a circular clarifying the treatment of the activity as a works contract. The Court set aside the impugned orders and revived the stay application for a fresh decision.2. The issue of distinguishing between the value of goods supplied and services rendered for service tax purposes was addressed. The CESTAT allowed a 67% abatement for the value of service, considering the inclusion of goods in the gross receipts. The judgment also discussed the taxability under the works contract service and commercial or industrial construction service, emphasizing the misconceived claim for immunity to service tax.3. The judgment analyzed the applicability of works contract service and commercial or industrial construction service. It referenced the Larger Bench ruling in a specific case and directed a pre-deposit based on the interpretation of relevant sections of the Finance Act, 1994. The Court dismissed a creative contention for unconditional waiver of pre-deposit, considering it a dilatory strategy.4. There was a request for unconditional waiver of pre-deposit based on a Supreme Court judgment regarding works contract taxation. The Court, however, found the request to be a dilatory strategy and dismissed the miscellaneous application. The appellant was directed to comply with the pre-deposit amount within a specified timeline, failing which the appeal would stand dismissed.5. The miscellaneous application for waiver of pre-deposit was ultimately dismissed by the CESTAT. The Court upheld the pre-deposit amount ordered earlier and set a deadline for compliance. Failure to comply would result in the dismissal of the appeal for failure of pre-deposit. The judgment emphasized the importance of adhering to the legal procedures and obligations outlined in the previous orders.