VIJETHA ENTERPRISES Vs. COMMISSIONER OF CENTRAL EXCISE, HYDERABAD

JUDGEMENT

(1.) THIS application filed by the applicant seeks waiver of pre -deposit and stay of recovery in respect of service tax of Rs. 32,53,769/ - demanded for the period from July 2003 to March 2009 and also penalties imposed on the appellant. The impugned demand of service tax is under the Head Maintenance or Repair Service which pertains to maintenance/repairs undertaken by the appellant on various equipments installed in Naval Dockyard. These activities were undertaken under agreements entered into with the Military Engineering Service (MES) under the Ministry of Defence (MOD). The demand has been contested both on merits and on the ground of limitation. The case of the appellant, as sought to be made out by their counsel is that, as their activity of repairs/maintenance pertains to a property belonging to the Ministry of Defence and did not involve any commercial element, they were exempted from levy of service tax by virtue of the definition of Commercial or Industrial Construction Service. In this connection, the learned counsel has claimed support from Para 12 of a Final Order passed by a coordinate Bench vide National Refrigeration & Air Conditioning Engineering v. CCE, Ludhiana [2011 (23) S.T.R. 247 (Tri. -Del.)]. With reference to the said Para -12, the learned counsel submits that, as the property which was repaired/maintained by the appellant was not used or to be used for commerce or industry, service tax was not leviable on such repairs or maintenance. The learned Additional Commissioner (A.R.) has contested this argument by pointing out that the impugned demand of service tax is under Repairs or Maintenance Service, the definition of which does not distinguish properties used for commerce or industry from those not put to such use. It is further submitted that the activity in question was undertaken by the appellant mostly on movable properties and therefore they cannot claim the benefit of the clarification of Ministry of Finance (MOF) referred to in para 12 of the Tribunals Order in National Refrigeration case.

(2.) LEARNED counsel has also contested the demand on the ground of limitation. It is submitted that the first show -cause notice was issued beyond the normal period by invoking the extended period of limitation on the alleged ground of suppression of facts. According to the learned counsel, the allegation of suppression is not sustainable in the facts and circumstances of this case. In answer to a query from the Bench, it is submitted that the amount of service tax demanded for the normal period is over Rs. 8,00,000/ -.

(3.) THE appellant has not pleaded financial hardships In the stay application. After considering the submissions, we do not think that the appellant has made out a prima facie case against the demand of service tax. There are more reasons than one to take this view. Firstly, no copy of the agreement said to have been entered into by the appellant with MES has been brought on record and, therefore, the question whether movable or immovable property was repaired/maintained by the appellant is not ascertainable at this stage. Secondly, the MOF clarification referred to in para -12 of the Tribunals order cited by the learned counsel does not refer to Maintenance or Repair Service defined under Section 65(64) of the Finance Act, 1994 and hence the clarification is of no aid to the appellant at this stage. Thirdly, the definition of Maintenance or Repair Service does not include, any commercial or industrial element which is conspicuously present in the relevant part of the definition of Commercial or Industrial Construction Service. However, we have considered the plea of limitation for the present purpose. In the absence of plea of financial hardships, we direct the appellant to pre -deposit an amount of Rs. 8,00,000/ - within six seeks and report compliance to the Assistant Registrar on 28 -5 -2012 and Assistant Registrar to report to the Bench on 4 -6 -2012. Subject to compliance, there shall be waiver and stay in respect of the penalties imposed on the appellant and interest on tax.