Leviability of service tax on reconditioning service prior to 16.05.2005

PJ/CASE LAW/2015-16/3007

Case:SHARDA UDYOG Versus COMMISSIONER OF CENTRAL EXCISE, GHAZIABAD

Citation:2015 (39) S.T.R. 1036 (Tri. - Del.)

Brief Fact:The appellant is in appeal against the impugned order where demand of service tax, interest and penalties has been confirmed against the appellant under the category of Management, Maintenance or Repair Services.
In brief, the case is that appellant is engaged in manufacture of sugar mill machinery and sugar mill roller and parts thereof. They have also under taken the process of shelling, deshelling and reshelling of old and worn out sugar mill roller supplied by various sugar mills. The contention of the appellant is that the appellant is engaged in the activity of reconditioning of old and used sugar mill rollers and obtained service tax registration with effect from 16-5-2005, as reconditioning has been included in the definition of Management, Maintenance or Repair Services w.e.f. 16-5-2005. The Revenue is of the view that the activity of the appellant is chargeable to service tax prior to the period 16-5-2005. Therefore, a show cause notice dated 24-1-2008 was issued for the period July, 2003 to May, 2005 demanding service tax on the activity of the appellant under the category of Management, Maintenance or Repair Services. The show cause notice was adjudicated, demand of service tax along with interest was confirmed and penalties under Finance Act, 1994 were also imposed. Aggrieved from the said order appellant is before the in this tribunal.

Appellant contention:  The ld. Counsel for the appellant submits that prior to 16-5-2005 the reconditioning activity was not included in the definition of Management, Maintenance or Repair Services and appellant is only engaged in the activity of reconditioning of old and used sugar mill rollers. Therefore, demand of service tax cannot be confirmed against the appellant. To support this contention, he relied on the decision of this tribunal in the case of Jagat Machinery Manufacturers P. Ltd. v. C.C.E, Ghaziabad, - 2013 (32)S.T.R.663 (Tri.-Delhi). Therefore, it is prayed that the impugned order is set aside.
He further submitted that in this case show cause notice has been issued by invoking extended period of limitation, when it is in dispute whether activity of reconditioning was liable to service tax prior to 16-5-2005 or not. Whether prior to 16-5-2005 the activity of reconditioning was liable to service tax when the activity of reconditioning was specifically included in the definition of Management, Maintenance or Repair Services is liable to service tax.

Reasoning of Judgment:Thereconditioning and restoration’ was not available in the definition of Management, Maintenance or Repair Services prior to 16-5-2005 and same was specifically introduced with effect from 16-5-2005.
They find that in this case the show cause notice has been issued by invoking extended period of limitation as the issue was before this tribunal where for the period prior to 16-5-2005 the activity of reconditioning is includable in the definition of Management, Maintenance or Repair Services in this dispute, therefore, extended period for limitation is not invocable.
In view of the above discussion, they hold that the activity of reconditioning by the appellant was not covered in the definition of Management, Maintenance or Repair Services for the period prior to 16-5-2005. In these terms demand of service tax is not sustainable against the appellant. Consequently, demand of interest and imposition of penalty are also not sustainable. In view of this, the impugned order is set aside. Appeal is allowed with consequential relief, if any.

Decision:  Appeal allowed

Comment:The substance of the case is that reconditioning and restoration service was not in the defination of management, maintenance or repair services prior to 16-5-2005 and same was specifically introduced with affect from 16-5-2005. Hence the demand of service tax is not sustainable also demand of interest and imposition of penalty are also not sustainable against the appellant.

Prepared By:Anash kachaliya

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PJ/CASE LAW/2015-16/3007

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