PSL LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) WE have heard both sides on the application for waiver of pre -deposit of service tax of Rs. 45,90,000/ -and penalty of equal amount of tax under Section 78, Rs. 1,000/ - under Section 77 and Rs. 200/ - per day under Section 76 of Chapter V of the Finance Act, 1994. The demand arises as a result of holding that the applicants are rendering commercial or industrial construction service and service tax was required to be paid on the advances received by them for rendering such service.

(2.) WE find that there is no dispute that the advances were for purchase of materials, as evidenced from the agreement entered into between the applicants and their clients, and therefore prima facie they are not liable to service tax even if it is held that they were rendering commercial and industrial construction service, for the reason that prima facie the definition of the above service would cover a situation where advances were taken not for purchase of material but towards rendering any service. We, therefore, waive predeposit of the tax and penalties and stay recovery thereof pending the appeal without recording any prima facie finding on the submission made by the learned Counsel for the applicants that the nature of the contract in the present case is a works contract which was not leviable to tax pre -1 -6 -2007.