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2013 (2) TMI 487 - HC - Service TaxDirection to pre-deposit a sum of Rs. 1.50 crore out of confirmed demand of Rs. 7.48 crore for the purposes of hearing the appellant s appeal on merits - disallowance of entitlement to the benefit of Notification No. 1/2006-S.T. & also invoked the extended period of limitation by alleging suppression - Held that - Tribunal in the impugned order has proceeded on the basis that no evidence with regard to sale of goods and materials used in providing services was led by the appellant. This ignores the evidence led before the Commissioner in adjudication proceedings. As that the evidence of the value of goods supplied was on record and the Tribunal has not taken even a prima facie view on the same. The works contract/job work may not separately provide for sale of the goods but may be a composite amount for doing the work. Therefore, the supply value of goods has to be understood in the context of the work contract/job work contract to determine whether it included in it also the sale of goods. Besides, it is the contention of the appellant that the demands are barred by limitation as well as the duty amount has been wrongly computed in the show-cause notice and if the correct rate for Works Contract Services under the composition scheme at 4% is applied the appellant would be entitled to refund of service tax - set aside the impugned order and remand the matter to the Tribunal to consider afresh the stay application filed by the appellant after hearing the parties.
Issues:
1. Whether the Tribunal was justified in directing the appellant to pre-deposit a sum of Rs. 1.50 crore for hearing the appeal on merits? Analysis: The appellant, engaged in turnkey works contracts, registered for service tax under the Finance Act, 1994. A demand notice was issued for Rs. 3.74 crores, alleging ineligibility for a tax benefit and invoking the extended limitation period. The Commissioner confirmed the demand and penalty, stating lack of evidence for sale of goods. The appellant appealed, seeking waiver of pre-deposit. The Tribunal ordered a pre-deposit of Rs. 1.50 crore, citing lack of evidence for the tax benefit. However, the High Court noted evidence presented before the Commissioner, emphasizing that the value of goods supplied was on record. The Court highlighted the need to consider the supply value of goods in the context of the work contract to determine if it included the sale of goods. The Court also addressed issues of limitation and incorrect duty computation, remanding the matter to the Tribunal for fresh consideration of the stay application. This judgment emphasizes the importance of considering all evidence presented in tax disputes and understanding the context of work contracts in determining tax liability. It highlights the need for a comprehensive assessment of the supply value of goods in relation to the services provided. Additionally, the judgment underscores the significance of addressing issues of limitation and correct duty computation in tax matters. The Court's decision to remand the case for further consideration ensures a fair review of the appellant's arguments and contentions, maintaining the principle of natural justice in tax dispute resolution.
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