FUTURA TECHNOLOGICAL SERVICES Vs. C.C.E.

JUDGEMENT

(1.) THIS application filed by the appellant seeks waiver and stay against the adjudged dues including an amount of Rs. 91,53,755/ - demanded towards service tax and education cesses, equal amount imposed as penalty under Section 78 of the Finance Act, 1994 and another amount of Rs. 30,000/ - imposed as penalty under Section 77 of the Act. The period of dispute is 2007 -08 to 2010 -11, for which show cause notice was issued on 29 -12 -2011 invoking the proviso to Section 73(1) of the Act on the alleged ground of suppression of facts. A major part of the impugned demand of service tax is under the head "site formation and clearance, excavation and earth moving and demolition service" ("site formation and clearance service", for short) and the same amounts to Rs. 51,64,159/ -. Towards this demand, an amount of Rs. 8,31,039/ - pertaining to area grading was paid by the appellant. The balance amount of Rs. 43,33,120/ - has been demanded in relation to transportation of earth found to be a part of the site formation and clearance service. The entire demand of Rs. 51,64,159/ - has been estimated on the gross amount collected by the appellant from M/s. Reliance Infrastructure Ltd., under two work orders. A copy of one of these work orders is available on record (pages 151 to 167), which covers excavation and loading, levelling and compaction. A copy of the other work order is also available on record (pages 178 to 193), which covers transportation of earth. According to the learned counsel for the appellant, the work orders represent two different contracts and therefore the amount collected by the appellant from Reliance on account of transportation was not liable to be taxed under "site formation and clearance service." In this connection, he has pointed out that the parties to the contract understood and considered transportation of earth as a separate contract. He has further submitted that, as per the terms of the relevant work order. Reliance was liable to pay service tax on the entire cost of transportation of earth, as the service recipient, in the reverse charge mechanism. Accordingly, Reliance paid service tax of 25% of the cost of transportation by claiming abatement to the extent of 75% from the gross value. In other words, Reliance paid service tax of Rs. 10.83 lakhs on the transportation of earth and therefore the appellant's liability, if at all, will be only to the extent of Rs. 32.5 lakhs out of the aforesaid amount of Rs. 43.33, lakhs demanded by the adjudicating authority. The learned counsel has also pleaded limitation against this demand by pointing out that, as transportation of earth was considered as separate contract and Reliance had to discharge service tax liability on this activity in the reverse charge mechanism, the appellant never had any reason to believe that they had tax liability in respect of transportation of earth. On the other hand, the appellants believed that service tax on the transportation of earth would be paid by Reliance. In this manner, the learned counsel has argued that, if it be assumed that the appellant ought to have paid service tax on the cost of transportation of earth, they cannot be held liable to pay such tax for the extended period of limitation. In this connection, in answer to a query, the learned counsel submits that the amount of service tax demanded for the normal period is only Rs. 10.5 lakhs approximately.

(2.) WE have also heard the learned Addl. Commissioner (AR) who has argued in support of the demand of service tax from the appellant on the transportation of earth. With reference to the work orders, he has argued that transportation of earth was an integral part of site formation and clearance service and that it was artificially separated from the rest of the activities by the contracting parties with intent to defraud the Revenue. He has also argued that, in such circumstances, the appellant should be held to have suppressed the material facts with intent to evade payment of service tax on the cost of transportation of earth.

(3.) ANOTHER part of the total demand of service tax on the appellant is that of Rs. 9,43,338/ - which pertains to the work of construction of Yanam Obelisk Tower, a replica of Eiffel Tower, Paris. It is not in dispute that this amount of service tax was paid by the appellant.