Once a service is specifically made taxable, it cannot be presumed to be covered under another service prior to its enactment.

PJ/Case law/2013-14/1891

Case:-SANA ENGINEERING COMPANY Vs COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX, COIMBATORE

Citation:-2013-TIOL-1566-CESTAT-MAD

Brief facts:-Applicants own industrial cranes which they make available to others for various purposes. One of such purposes is erection of wind mill towers. In respect of such activity, appellants were paying service tax under the category of "Erection and Commissioning Service" since July 2005. During the same time, they were also making similar cranes available to certain other parties for doing other types of activities on which they were not paying service tax because such activities, according to the applicant, were not in the nature of erection and commissioning. Subsequently, from 16.5.2008 when new entry for taxing "supply of tangible goods" came into force as per section 65 (105) (zzzz), they got themselves registered for paying service tax under this category of service and started paying service tax for cranes supplied for activities other than erection and commissioning also. At this stage, Revenue issued a show cause notice arguing that prior to 16.5.2008, services rendered by them would be covered by entry for "Business Support Service" under section 65 (105) (zzzq) which came into force from 1.5.2006 onwards. Based on such reasoning, a demand was issued to the applicant for that portion of the remuneration received by them on which service tax was not already paid. On adjudication, an amount of Rs.24,46,786/- is confirmed against the applicant along with interest and penalties. The appellant preferred appeal to the Commissioner Appeals that upheld the order passed by the adjudicating authority. Aggrieved by the order in appeal, the appellant preferred appeal to the Tribunal.

Appellant contentions:-The counsel for the applicant submits that making available cranes owned by them to another person would be appropriately covered by "Supply of Tangible Goods services" and it cannot be covered by "Business Support Service" which was a residual entry which lacks clarity regarding its coverage. He points out none of the activities specifically mentioned in the definition for 'Business Support Service' could cover the activity of the appellant. He argued that once a more specific entry has come into force, there is a presumption that for the period prior to enactment of such specific entry, the service in question would not be covered by any other entry which is not specific. He also points out that this very same issue has come before the Tribunal in a few cases at the stay stage and Tribunal was of prima facie view that supply of such tangible goods could not be taxed under the category of "Business Support Service" from 1.5.2006 to 15.5.2008 and the Tribunal has granted stay. He therefore prays that in this case also appeal may be admitted without any pre-deposit and stay may be granted. He relies on the following orders:

(i) Industrial Handling Vs. CCE - 2011 (23) STR 559 (Tri.-Kol)

(ii) Industrial Services (Gases) Vs. CCE - 2010 (19) STR 445 (Tri.-Kol)

Respondent Contentions:-Respondentsubmits that the definition of "Business Support Service" is broad enough to cover any service that is rendered for which remuneration is received. By making available cranes, applicants were supporting the business activity of the person to whom cranes were made available.

Reasoning of judgement:-"Business Support Service" is in the nature of residual entry and cannot cover an activity, like making tangible goods available to another person which was subsequently covered by a specific entry. Therefore, we follow the precedent decisions and grant waiver of pre-deposit of dues arising from the impugned order and there shall be stay on collection of such dues during pendency of the appeal.

Decision:-Stay Granted.

Comment:-The essence of this case is that when a service is made leviable to service tax from a particular date, it cannot be made leviable to service tax under some other category prior to such date. Therefore, the service of supply of tangible goods cannot be leviable to service tax under Business Support Service for the period prior to its coming into service tax net.

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PJ/Case law/2013-14/1891

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