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2014 (1) TMI 775 - HC - Service TaxStay application - Waiver of pre deposit - Commercial or Industrial Construction Services - Held that - even if the condition of pre-deposit is maintained, its rigour deserves to be brought down and softened to the extent of avoiding undue hardship to the petitioner - respondents are not in a position to dispute the fact that in relation to the principal, i.e., M/s NLC, the imposition of service tax in relation to the activity of road construction was not approved by the Commissioner (Appeals), Central Excise, Jaipur - Appellate Authority in relation to the case of M/s NLC and then, looking to the fact that the petitioner has an arguable case on merits, it appears just and proper that the petitioner be allowed an opportunity of merit-hearing of the appeal without being forced to deposit an amount equal to the principal demand of service tax. Of course, where the matter would require proper adjudication after hearing the parties and otherwise, pre-deposit remains a statutory requirement, subject to the modification as deemed fit and proper in the case of undue hardship, we are of the view that it would serve the cause of justice if the petitioner is directed to deposit of Rupees Ten lacs instead of Rupees Thirty Five lacs - Conditional stay granted.
Issues:
1. Applicability of service tax on road construction work. 2. Prima facie view of the Appellate Authority. 3. Requirement of pre-deposit for stay over recovery proceedings during appeal. Analysis: 1. The case involved a dispute regarding the applicability of service tax on road construction work carried out by the petitioner for a power generation company. The revenue claimed that the petitioner provided taxable services falling under "Commercial or Industrial Construction Services" and evaded service tax. The petitioner argued that their services fell under an exception in the Finance Act, 1994. The Adjudicating Authority imposed service tax and penalties on the petitioner, leading to an appeal before the Commissioner (Appeals), Central Excise, Jaipur-I. 2. The Appellate Authority, in its order dated 21.02.2013, directed the petitioner to deposit Rs. 35,00,000 towards the demand in question for stay over recovery proceedings during the appeal. The petitioner contended that they had a strong prima facie case based on a previous order by the same Appellate Authority regarding the power generation company, which held that road construction was excluded from service tax. The respondents supported the order, citing the statutory requirement of pre-deposit and no need for interference. 3. The High Court considered the submissions and observed that the condition of pre-deposit should be softened to avoid undue hardship to the petitioner. The Appellate Authority's order was analyzed, noting that the construction of roads for commercial activities was not taxable in the case of the principal company, M/s NLC. Therefore, the High Court modified the pre-deposit requirement to Rs. 10,00,000, allowing the petitioner to deposit this amount within three weeks. The recovery of the remaining demand was stayed until the appeal's final disposal, emphasizing that the final decision on the case's merits would be made by the Appellate Authority in accordance with the law.
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