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Issues involved:
The issues involved in the judgment are the requirement of pre-deposit of service tax amount, penalty under Section 76 of the Finance Act, 1994, levy of service tax on activities related to manufacturing, sale, erection, commissioning, installation, maintenance, and repair services under composite contracts, interpretation of contracts for service tax purposes, and the applicability of previous judgments by the Apex Court and Tribunal. Pre-deposit of service tax and penalty: The appellant was directed to pre-deposit a specific amount of service tax and penalty under Section 76 of the Finance Act, 1994. The Revenue levied service tax on activities related to manufacturing, sale, erection, commissioning, installation, maintenance, and repair services under composite contracts with customers. The appellant argued that they had already paid service tax for maintenance and repair services under the composite contract, and separate levy of service tax on erection, commissioning, and installation activities was not justified. The appellant relied on various judgments, including one by the Apex Court in the case of Kone Elevators (India) Ltd., which held that the activity was a "sale" and not a "Works Contract." The Tribunal's ruling in the case of Turbotech Precision Engineer P. Ltd. was also cited, emphasizing that a "Works Contract" cannot be vivisected to levy service tax on different activities. The appellant sought a full waiver of the pre-deposit based on these judgments. Interpretation of contracts for service tax purposes: Upon reviewing the contract, it was observed that composite charges were imposed on the appellant for all activities, and they had already paid service tax for maintenance and repair services. Citing the Apex Court's decision in the case of Kone Elevators (India) Ltd., which classified the activity as a "sale" and not a "works contract," the Tribunal found merit in the appellant's argument. The Tribunal also considered the judgment in the case of Daelim Industrial Co. Ltd., affirmed by the Apex Court, which stated that a contract primarily based on material supply cannot be treated as a consulting contract for service tax purposes. Consequently, the Tribunal granted a full waiver of the pre-deposit amount and stayed its recovery until the appeal's disposal, indicating a prima facie case in favor of the appellant.
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