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of <h1>Tribunal rules in favor of appellants in service tax liability case for Water Reservoir construction.</h1> The Tribunal ruled in favor of the appellants in a case concerning liability for service tax under a sub-contract classified as a 'works contract.' The ... Work Contract Service - The assessee was sub-contracted work of construction of raw water reservoir and its lining package by 'S' which was awarded to 'S' by NTPC. Service tax demand was confirm on the assessee under category of 'Site formation and clearance' excavation and earth moving and demolition services. It was found that assessee was registered as an assessee for 'Work Contract'. Tribunal held that same was not taxable as work involved was 'Work Contract' which was bought into tax net beyond period of dispute. Held that - assessee made out a prima facie case for the waiver of pre-deposit. Issues:1. Liability to pay service tax for services rendered under a sub-contract.2. Classification of the activity as 'works contract' for tax purposes.3. Applicability of circulars and case laws on liability for service tax.4. Registration under 'works contract' with commercial tax authorities.5. Prima facie case for waiver of pre-deposit and stay of recovery.Analysis:1. The appellants were required to deposit a specific amount towards Service Tax found due from them for services rendered under a sub-contract. The penalty imposed under sections 76, 77, and 78 of the Finance Act was also challenged. The appellants argued that the impugned activity was undertaken as a 'works contract' based on a sub-contract awarded to them, referencing a previous Tribunal order in favor of the principal contractor.2. The classification of the activity as 'Site formation and Clearance, Excavation and Earth moving and demolition services' was disputed by the appellants. They contended that the work carried out under the contract with the principal contractor was a 'works contract' and should not be taxed. The Tribunal found merit in the appellants' argument, especially since the activity related to the construction of a Water Reservoir, which was excluded from taxable activities under the relevant entry.3. The appellants relied on various circulars and case laws to support their claim that as a sub-contractor, they were not liable to pay tax if the principal contractor had already paid the tax due. However, the Revenue argued that the circulars cited were not applicable in this case as the activities of the appellants and the principal contractor fell under different taxable service categories.4. The Tribunal noted that the appellants were registered with the commercial tax authorities of the Chhattisgarh Government as an assessee for 'works contract' from a specific date. The activities classified under 'works contract' were brought under the tax net at a later date, supporting the appellants' argument regarding the exclusion of their activity from taxable services.5. After considering the case records and submissions from both sides, the Tribunal found that the appellants had established a strong prima facie case on merits and limitation against the impugned dues. Consequently, the Tribunal ordered a waiver of pre-deposit of the confirmed dues and a stay of recovery pending the final decision in the appeal, providing relief to the appellants.
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