2008 (12) TMI 649 - AT - Service Tax

Summary

Issues: Application for waiver of pre-deposit of tax and penalties

Analysis:
The judgment pertains to an application for waiver of pre-deposit of tax amounting to Rs. 3,24,00,000. The applicant, engaged in real estate development, allegedly collected service tax from clients but failed to deposit it in the Government account as required by law. The applicant contended that the contractors engaged for construction had paid the tax under the category of residential and commercial complex construction services. The Revenue, however, argued that the applicant collected more amounts from clients than the contractors paid in tax. The Tribunal found that the applicant collected service tax from clients based on the sale price, while the sub-contractors paid tax at the construction price of flats. The Tribunal directed the applicant to deposit Rs. 30,00,000 within eight weeks, with the balance of tax and penalty waived until the appeal's disposal, pending further examination of the tax payment issue during the appeal hearing. The compliance was required to be reported by a specified date.

This judgment highlights the importance of complying with tax obligations in real estate transactions and the need for proper documentation and payment verification to support claims of tax payment by contractors. The Tribunal's decision to allow a partial waiver of pre-deposit pending appeal demonstrates a balance between the interests of the applicant and the Revenue, pending further scrutiny of the tax payment discrepancies.