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of <h1>Appellant denied abatement in works contracts; directed to deposit Rs. 2 crores within 8 weeks</h1> <h3>DECORATORS PVT. LTD. Versus COMMISSIONER OF SERVICE TAX, NEW DELHI</h3> The appellant's claim for abatement in works contracts was denied as the services provided were deemed to be dominant over the materials used, ... Abatement under Notification No. 1 /2006-S.T – grievance is that appellant had not at all carried out any completion and finishing activity to forgo the abatement granted by law in respect of the materials used in works contracts executed by the appellant. – Quantum of liability not known as work orders not produced for examination – reasoned and speaking order passed by adjudicating authority - Looking various aspects of the contract involved and also without any primary evidence before us for examination and equally considering that the appellant has made a deposit of Rs. 1,03,25,000/- which has been appropriated against the tax liability, and also interest of revenue following the decision of Apex Court in the case of Benara Valves reported in [2007 - TMI - 866 - SUPREME COURT OF INDIA] it would be proper to direct the appellants to make further deposit of Rs. 2 crores – Stay granted partly Issues:1. Appellant's claim for abatement in works contracts.2. Nature of services provided by the appellant.3. Requirement of pre-deposit and waiver.4. Compliance with the order and additional deposit.Analysis:Issue 1: Appellant's claim for abatement in works contractsThe appellant argued that they did not carry out completion and finishing activities to forgo the abatement granted by law for materials used in works contracts. The services provided were alteration and renovation activities, not finishing and completion. The appellant claimed exemption under Circular No. 1/2006 for materials involved in civil constructions.Issue 2: Nature of services provided by the appellantThe Joint CDR contended that the works executed were indeed completion and finishing activities, justifying the treatment in the original order. The Adjudicating Authority found that the services provided were dominant over the materials used, leading to the conclusion that the appellant was not entitled to abatement.Issue 3: Requirement of pre-deposit and waiverThe Tribunal noted the absence of work orders to determine the liability for services provided to eight recipients, making it difficult to consider waiving the pre-deposit fully. The appellant was directed to make an additional deposit of Rs. 2 crores within eight weeks, in addition to the amount already deposited, to stay the realization of the balance demand.Issue 4: Compliance with the order and additional depositConsidering the financial difficulties expressed by the appellant, the Tribunal balanced the interests of the Revenue with the size of the demand raised. The order was passed with the understanding of the financial situation of the appellant, while ensuring compliance and addressing the interest of the Revenue.This comprehensive analysis of the judgment highlights the key arguments, findings, and directives related to the appellant's claim for abatement, nature of services, pre-deposit requirement, and compliance with the order.
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