FACTS: The appellant (M/s MAS Construction Pvt. Ltd.) was engaged in providing taxable service namely commercial & residential construction services during the relevant period from 2004-05 to 2007-08. Demand was confirmed since even though the appellant was rendering taxable service, no service tax was paid by them. However the appellant raised three issues in respect to the amount of service tax charged -

1. The total Service tax demanded was inclusive of non-taxable value like receipts from LIC, refund from income tax, loan through director, receipt from fixed deposit etc.

2. Benefit of the Notification No. 15/2004-ST was denied as the value of free issue materials had been included in the gross taxable value.

3. Since the appellant, has been facing severe financial crisis, any direction for pre-deposit would cause undue hardship to them. Hence made an offer of depositing lesser amount in comparison of the appellant’s net tax liability.

HELD: The following facts were held by the Appellate Tribunal-

1. Total receipts attributable to non-taxable services will be deducted from the total amount of service tax demanded .

2. Notification No. 15/2004-ST clearly states that in respect of taxable service provided by a commercial concern to any person, in relation to construction service, the commercial concern will be allowed the benefit of service tax abatement of 67% of the gross amount charged from any person by such commercial concern for providing the said taxable service:

Provided that this exemption shall not apply in such cases where –

(i) The credit of duty paid on inputs or capital goods has been taken under the provisions of the Cenvat Credit Rules, 2004; or

(ii) The commercial concern has availed the benefit under the Notification No. 12/2003-Service Tax which hereby exempts so much of the value of all the taxable services, as is equal to the value of goods and materials sold by the service provider to the recipient of service, from the service tax leviable thereon under section (66) of the said Act, subject to condition that there is documentary proof specifically indicating the value of the said goods and materials.

As per the interpretation of the said notification, Revenue’s contention that the benefit of the Notification No. 15/2004-ST will be denied as the value of free issue materials had been included in the gross taxable value is not sustainable, hence the benefit of abatement will be allowed to appellant which will further reduce the service tax demand.

3. Considering the severe financial crisis faced by the appellant, since the request of pre-depositing a lesser amount was found to be reasonable, their request was accepted.

Hence balance dues stands waived off & its recovery stayed during pendency of appellant’s appeal.

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