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Issues involved: Interpretation of Notification No. 12/2003-ST for service tax on maintenance or repair service, consideration of value of material for retreading of tyres, applicability of extended period of limitation for demand and penalty under Sections 76 and 78 of the Finance Act.
Interpretation of Notification No. 12/2003-ST: The respondents contended that the value of material supplied on payment of appropriate VAT should not be considered for service tax payment, citing the case of Wipro GE Medical Systems Pvt. Ltd. vs. CST, Bangalore. However, the Tribunal, relying on the case of Safety Retreading Co. (P) Ltd., held that the maintenance and repair service is distinct from works contract service for service tax purposes. It was noted that the respondents failed to prove satisfaction of conditions under Notification 12/2003-ST, leading to the setting aside of the Commissioner (Appeals) order. Consideration of value of material for retreading of tyres: The Revenue argued that the value of material should be included for service tax calculation based on the Tribunal's decision in the case of Safety Retreading Company (P) Ltd. vs. CCE, Salem. The Tribunal concurred, emphasizing that the value of rubber used in retreading tyres is relevant for service tax under maintenance and repair service, thereby declaring the impugned order unsustainable and setting it aside. Applicability of extended period of limitation: Regarding the extended period of limitation, similar to the case of Safety Retreading Co. (P) Ltd., a difference of opinion arose and was referred to a Third Member. The Tribunal concluded that demands beyond the normal limitation period are not sustainable, leading to the dismissal of penalty under Section 78 of the Finance Act. Consequently, the demand and penalty beyond the normal period were set aside, while upholding the rest of the impugned order. The appeal and cross objections were disposed of accordingly.
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