Whether re-shelling of old sugar mills rollers leviable to service tax under repair and maintenance service?

PJ/CASE LAW/2014-15/2409

Case:- COMMISSIONER OF CENTRAL EXCISE, KOLHAPUR V/S S. B. RESHELLERS PVT. LTD.

Citation:- 2014 (340 S.T.R. 605 (Tri. – Mumbai)

Brief facts:- Brief facts of the case are that the respondent are engaged in providing services of re-shelling of old sugar mills rollers. Show cause notice was issued to the respondent demanding service tax under Maintenance or Repair Service as defined under section 65(64) of the Finance Act, 1994. The adjudicating authority confirmed the demand and imposed penalties. The respondent filed appeal before the Commissioner (Appeals) and the Commissioner (Appeals) held that the value of material used in providing service is not to be taken into consideration while arriving at the assessable value of taxable service.

Appellant’s contentions:-Revenue filed this appeal on the ground that the value of material is to be included in the value of service as the material is not separately supplied but the same is consumed during re-shelling of old rollers.

Respondent’s contentions:- The contention of the respondent is that the demand is for the period from 1-7-2003 to 10-9-2004 and the definition of Repair and Maintenance Service is amended with effect from 16-6-2005. The contention is that prior to 16-6-2005 if the repair is carried out under maintenance and repairs contract or agreement the same is liable for service tax and relied upon Board’s Circular F. No. B1/6/2005-TRU, dated 26-7-2005.

Reasoning of judgment:- We find that in the present case, there is no maintenance contract or agreement. Therefore, there is no merit in the appeal filed by Revenue, in view of this board’s Circular dated 27-7-2005, wherein it has been clarified in para 16.4, that prior to 16-6-2005 maintenance or repair carried out under an agreement or contract was covered under the service tax. Repairs and service carried out under a contract other than a maintenance contract was not covered within the purview of service tax.

Revenue has only raised the issue of valuation of taxable service. In view of the above finding as the activity is not liable for service tax, we find that the issue of valuation will not survive.

Decision:- The appeal is dismissed.

Comment:- The analogy of the case is that the issue involved in the case is related to prior period from 16-6-2005 wherein the definition of Maintenance and Repairs services stated that repair services provided in terms of a contract is leviable to service tax. Accordingly, as in the present case, there was no agreement for repairs and the issue is also prior to 16-6-2005, it was concluded that no service tax is leviable. As the revenue was in appeal on the valuation issue, the same was also rejected because when there is no liability to service tax, the question of valuation does not arise.

Prepared by:- Monika Tak

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PJ/CASE LAW/2014-15/2409

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