VASCON ENGINEERING PVT. LTD. Vs. CCE

JUDGEMENT

(1.) THESE are two appeals - -one filed by M/s. Vascon Engineering Pvt. Ltd. (hereinafter referred to as 'the assessee') and second by the Revenue are against the same Order -in -Appeal No. 408/CE/CHD/2008 dated August 6, 2008. Brief facts of the case are that the assessee is registered for service tax under "commercial and industrial construction" and "residential complex construction service" with effect from September 10, 2004 and June 16, 2005, respectively. It was observed by the Department that the assessee received an amount of Rs. 76,13,064 on account of maintenance and repair of immovable property of their client M/s. Cipla Ltd., Baddi during the period May 2006 to December 2006. It was the contention of the Department that services provided by the assessee falls under category of management, maintenance and repair service and is taxable with effect from May 1, 2006. Abatement of 67 per cent, of taxable value availed by the assessee under Notification No. dated March 1, 2006 is applicable to commercial and industrial construction service only and not to management, maintenance and repair service. Accordingly, a show -cause notice demanding service tax of Rs. 5,24,493 short -paid by them was issued. Notice was adjudicated by the Joint Commissioner who vide his Order -in -Original No. 1/2008 dated January 29, 2008 confirmed the service tax along with interest. Penalties under section 76 and section 78 were also imposed on the assessee. The assessee filed an appeal before the Commissioner (Appeals) who vide the impugned order set aside the penalty imposed under section 76 of the Act and penalty imposed under section 78 of the Act was reduced to 25 per cent, of tax amount. The assessee has challenged this order before this Tribunal in the present appeal. The Revenue has also challenged the impugned order on the ground of reduction of penalty.

(2.) THE learned advocate for the assessee submits that they are engaged in activity of construction of buildings and are covered under commercial and industrial construction service and also doing repairs of buildings. Repairs of building is covered under section 65(25) of the Finance Act and not under 65(64) of the Act as contested by the Revenue. He fairly submits that since the amount is small and they have paid the service tax along with interest as early in February 2008, they are not contesting service tax but there is no case for imposition of penalty on them. He submits since there are two interpretations about classification of service under sections 65(25b) and 65(64) there is reasonable cause for failure of payment of service tax and benefit of section 80 of the Finance Act is applicable to them.

(3.) AFTER hearing both sides, we find that the assessee was paying service tax under the category of commercial and industrial construction and residential complex construction service prior to May 1, 2006. Service tax on maintenance and repairs was also being paid by them under section 65(25) of the Finance Act after availing of abatement of 67 per cent, under Notification No. dated March 1, 2006, Revenue demanded service tax short -paid by them under maintenance and repair under section 65(64) of the Finance Act.