By TIOL News Service

MUMBAI, DEC 11, 2013: THE applicant has filed an application for waiver of pre-deposit of service tax of Rs.11,55,45,002/-, interest and penalty.

A demand of Rs.4,96,78,270/- is confirmed on the ground that the applicant had undertaken the construction activity of railway sliding and is, therefore, liable to pay service tax as provider of Commercial or Industrial construction.

Another demand of Rs.4,14,14,117/- is confirmed on the ground that the applicant had received mobilization advance in relation to various construction contracts and had not paid the service tax on this amount.

There is also a demand of Rs.2,44,52,615/- confirmed in respect of the amount received from the associated concerns.

Before the Bench it is submitted as under -

+ In applicant's own case, the tribunal vide stay order dated 2.9.2013 in appeal No. ST/133/11 2013-TIOL-1735-CESTAT-MUM, waived the pre-deposit of the dues which were confirmed in respect of construction of railway sliding by observing that Construction work for Railway and Railway siding is specifically excluded from the purview of Construction service inasmuch as ‘siding' is also a part of Railway as per Indian Railway Act, 1989.

+ They had received the advance which has to be paid as per the contracts along with interest and the advance amount is to be adjusted against the running bills; since they had paid service tax on the gross amount of the construction activity which also includes the mobilization advance, therefore the demand is not sustainable.

+ In the matter of amounts received from the associated concerns, they had already paid service tax and in case where the service tax has been paid not on due date, the interest is also paid. In view of this as the amount has already been paid along with interest, therefore the pre-deposit of this amount is waived.

The Revenue representative submitted that in his statement, the Senior Manager, admitted that no service tax has been paid on mobilization advance; that even if the amount of mobilization advance is adjusted in the running bills it would mean that there is a delay in the deposit of service tax regarding this amount; that in the matter of demand of more than Rs.4 crores, the interest will come to approximately Rs.30 lakhs if the amount has been adjusted within six months in the running bills.

The Bench while granting waiver of pre-deposit in respect of ST demand raised in respect of construction of Railway siding in view of its Stay order dated 02/09/2013 also observed that in the matter of ST demanded on the amount received from Associated concerns, the appellant had already paid ST along with interest and, therefore, the pre-deposit of the said demand is also waived.

However, in the matter of ST on mobilization advance, the Bench observed that prima facie there is a delay in payment of Service Tax and, therefore, directed the applicant to make a pre-deposit Rs.30 lakhs for obtaining Stay in the matter.

(See 2013-TIOL-1837-CESTAT-MUM)