2003 (11) TMI 613 - AT - Service Tax

Summary

Issues:
Waiver of deposit of service tax and penalty for repair services provided by the assessee.

Analysis:
The judgment revolves around the application for waiver of deposit of service tax and penalty amounting to specific figures. The assessee, engaged in the manufacture of injection moulding machines, faced a demand following the finding that the repair services provided after the warranty period on the machines supplied were considered taxable services. The Counsel for the applicant argued that the repair services were not akin to services provided by a consulting engineer but were merely repairs carried out on the sold machines. The contention was supported by Circular No. B-47/5/97-TRU, dated 2-7-1997, which specified services provided by consulting engineers and firms, excluding repairs.

The departmental representative, however, argued that the repair services involved trouble shooting, a service specified in the circular, implying that the repair work necessitated identifying and solving problems, constituting a service provided by a consulting engineer. The Tribunal acknowledged the merit in this argument but found it challenging to categorize repairs on sold goods as services provided by consulting engineers. Consequently, the Tribunal directed the applicant to deposit a specific amount within a stipulated timeframe, following which the waiver of the remaining service tax and penalty was granted, and the recovery of the same was stayed.

The judgment highlights the interpretation of repair services provided by the assessee post-warranty period on the machines sold, in the context of taxable services under service tax regulations. It delves into the distinction between repair services and services provided by consulting engineers, referencing relevant circulars to support the arguments presented by both parties. The Tribunal's decision to grant partial waiver based on the nature of the services rendered underscores the nuanced assessment of the activities carried out by the assessee and the applicability of service tax and penalties in such scenarios.