CITILIGHTS PROPERTIES PVT. LTD Vs. CESTAT

JUDGEMENT

(1.) The order of the first respondent - Customs, Excise and Service Tax Appellate Tribunal (for short, 'CESTAT'), Chennai, in Miscellaneous Order Nos. 40341/2013 and 40342/2013 in ST/S/499 & 500/2012 in ST/607 & 608/2012, dated 7-2-2013, is called in question by the petitioner-Company, seeking to quash the same insofar as it requires the petitioner to make the total pre-deposit of Rs. 2.5 crores (Rs. 67 lakhs + Rs. 183 lakhs) and they also seek for a consequential direction to the CESTAT to entertain the appeals by waiving pre-deposit. The petitioner is a company engaged in construction activities, both residential, complexes and commercial and industrial complexes. During the period from August, 2005 to March, 2009, they have not paid appropriate Service Tax on certain projects executed by them, and therefore, the respondent-authorities demanded Service Tax in respect of two projects, namely "Meadows Residential" and "Pacifica Commercial", indicating the taxable value and Service Tax as follows:

(2.) It is the contention of the Revenue that the contract cannot be divided into two, one of supply of material, and the other for providing services, by relying Article 366(29-A)(b) of the Constitution of India and the decision of the Apex Court,State of Andhra Pradesh v. Larsen and Toubro, 2008 9 SCC 191.The CESTAT accepted the contention of the Revenue that the petitioner cannot split the value of the contract artificially into material cost and service cost and the impugned goods are not materials sold, but actually materials consumed in rendering the service of construction of complex and so, the differential duty of Rs. 18.25 crores demanded is in accordance with law.

(3.) The CESTAT took note of the fact if abatement as provided under Notification 18/2005-S.T., dated 7-6-2005 and Notification 1/2006-S.T., dated 1-3-2006, is allowed, the taxable value of service net of value of input services works out to Rs. 61.38 crores (33% of Rs. 186 crores), as against which, the petitioner claims that the value of service (inclusive of value of input service) is only Rs. 35 crores and the genesis of the dispute is the difference of Rs. 26.38 crores, though either side did not focus on that issue so clearly, and therefore, it observed that the defect in arriving at the difference because of the two figures, is not for same components of costs and is on approximation basis only, based on which, the additional liability on account of dispute about the project cannot he prima facie more than about Rs. 6.2 crores (Rs. 3.26 crores being tax on Rs. 26.38 crores plus the Cenvat credit of Rs. 2.93 crores, which cannot be availed if average abatement of 67% is availed). The CESTAT also noticed another way of presenting the estimate by observing that if 67% abatement is extended, then tax payable will be Rs. 386*0.33*0.1236 = Rs. 7.58 crores and out of this amount, the petitioner has already paid Rs. 1.32 crores leaving about Rs. 6.2 crores in dispute.