Taxability of Reconditioning Services prior to 16-5-2005.

PJ/CASE LAW/2015-16/2945

Case:- SHARDA UDYOG versus COMMISSIONER OF CENTRAL EXCISE, GHAZIABAD

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

Brief facts:-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. Reconditioning Service had 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 and accordingly show cause notice is issued to assessee.

Appellant’s contention:-The appellant contended that he 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.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) :-
“It is to be held that activity of old and worn out sugar mill rollers was liable to service tax only with effect from 16-5-2005”.

Appellant 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. Therefore, extended period for limitation is not invocable.

Respondent’s contention:- 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.

Reasoning of judgment:-The issue came up before this tribunal in the case of Jagat Machinery Manufacturers P. Ltd. (Supra) where this tribunal has observed as under :
“It is to be held that activity of old and worn out sugar mill rollers was liable to service tax only with effect from 16-5-2005”.
It was also observed in the said order that “definition of Management, Maintenance or Repair Services was amended with effect from 16-5-2005 and the service of reconditioning was introduced”. The above fact stand admitted by the Commissioner (Appeals) but he has observed that such inclusion in the definition was for giving wide meaning to the service and avoid speculations and interpretations.
This Tribunal has arrived at a decision that for the period prior to 16-5-2005 the definition of Management, Maintenance or Repair Services did not cover the reconditioning and restoration service.

Decision:-The decision went in favour of appellant and it was held 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. The impugned order is set aside and the appeal is allowed with consequential relief to appellant.

Comment:-The essence of the case is that since the definition of Management, Maintenance or Repair Services has been amended w.e.f. 16-5-2005, therefore those activities which have been included in the said definition due to amendment should be taxable only w.e.f.16-5-2005 and not for the prior period. Therefore, case went in favour of assessee and has been granted relief from interest and penalties.

Prepared by:- Manish Satyani

Comments

PJ/CASE LAW/2015-16/2945

Post a Comment

Query