2009 (4) TMI 789 - AT - Service Tax

Summary

Issues:
1. Restoration of Appeal due to COD Clearance
2. Waiver of pre-deposit of Service Tax and penalties
3. Classification of services under industrial construction service
4. Time-barred demand and financial hardship claim

Restoration of Appeal due to COD Clearance:
The Applicants filed an Application for restoration of the Appeal, which was dismissed initially for lack of COD Clearance. The Appellant has now provided the necessary clearance from COD. Consequently, the Order dismissing the Appeal has been recalled, and the Appeal is restored to its original number.

Waiver of pre-deposit of Service Tax and penalties:
The Applicants also filed an Application for the waiver of pre-deposit of Service Tax amounting to Rs. 86,73,683/- and penalties. The demand was confirmed based on the Applicants rendering industrial construction service as per Section 65(25B) of the Finance Act, 1994. The contention of the Applicants is that the construction of a chimney for a power plant falls under works contract service, which came under the purview of Service Tax from 1-6-2007. They argue that the demand for the period 10-9-2004 to 31-7-2006 is not sustainable. The Applicants also claim that the demand is time-barred as the show cause notice was issued on 12-9-2006, and there was no suppression to evade payment of Service Tax. They highlight their registration as a provider of construction service on 9-12-2004 and plead financial hardship due to heavy losses.

Classification of services under industrial construction service:
The Revenue contends that the provider of industrial construction service is liable to pay Service Tax, as it was applicable from 10-9-2004 onwards. Industrial construction service, as defined, includes the construction of new buildings or civil structures. Since the Applicants constructed a chimney during the period in question, it falls under the scope of industrial construction service according to the Revenue.

Time-barred demand and financial hardship claim:
The Tribunal observes that the Applicants indeed entered into a contract for the construction of a chimney in a power plant between 10-9-2004 to 31-7-2006. During this period, industrial construction service encompassed the construction of new buildings or civil structures. While the Tribunal finds that the Applicants have not made a strong case for a total waiver of pre-deposit of Service Tax, considering the financial hardship claimed, they are directed to deposit Rs. 20,00,000/- within eight weeks. Upon this deposit, the pre-deposit of the remaining Service Tax amount is waived, with compliance to be verified by 29-6-2009.

*(Pronounced and dictated in the open court)*