2009 (7) TMI 800 - AT - Service Tax

Waiver of pre-deposit - Penalty Maintenance or repair, including, reconditioning or restoration or servicing of any goods or equipment, except motor vehicle is liable to service tax - circular was issued by the board after the amendment of the definition of maintenance or repair service - applicable, in this case in favour of the assessee - waiver of the pre-deposit of the amounts is allowed

Summary

Issues:
1. Stay application against waiver of pre-deposit.
2. Service Tax liability on repainting, surface preparation, punching, and stenciling of cylinders.
3. Interpretation of 'Maintenance or Repair Services' under relevant sections.
4. Applicability of CBEC Circular No. B1/6/2005-TRU dated 27-7-2005.
5. Prima facie case for waiver of pre-deposit.

Issue 1: Stay Application Against Waiver of Pre-deposit
The stay application was filed against the waiver of pre-deposit of various amounts, including Service Tax, interest, and penalties under the Finance Act, 1994. The Tribunal considered the application and heard both sides, ultimately allowing the waiver of the pre-deposit and staying the recovery until the appeal's disposal.

Issue 2: Service Tax Liability on Repainting, Surface Preparation, Punching, and Stenciling of Cylinders
The case involved the Service Tax liability on activities such as repainting, surface preparation, punching, and stenciling of cylinders. The Adjudicating Authority had dropped proceedings against the applicant, who undertook certification testing of cylinders for oil companies, thereby discharging the Service Tax liability. The Tribunal examined this issue in detail to determine the tax liability on these specific activities.

Issue 3: Interpretation of 'Maintenance or Repair Services' Under Relevant Sections
The appellant argued that the definition of 'Maintenance and Repair Services' during the relevant period did not cover reconditioning or restoration of goods. Reference was made to Section 65(64) and CBEC Circular No. B1/6/2005-TRU dated 27-7-2005, specifically clause No. 16.4, to support this argument. The Tribunal analyzed the definitions under different time periods and relevant legal provisions to ascertain the scope of maintenance and repair services for tax purposes.

Issue 4: Applicability of CBEC Circular No. B1/6/2005-TRU Dated 27-7-2005
The Tribunal considered the CBEC Circular issued on 27-7-2005, which clarified that maintenance or repair activities, including reconditioning or restoration of goods, were liable for service tax under certain conditions. The circular's interpretation and application to the case were crucial in determining the appellant's liability and the justification for the waiver of pre-deposit amounts.

Issue 5: Prima Facie Case for Waiver of Pre-deposit
After a thorough examination of the facts, records, definitions, and legal provisions, the Tribunal found that the appellant had established a prima facie case for the waiver of pre-deposit amounts. The clarification provided by the CBEC Circular favored the appellant's position, leading to the allowance of the application for waiver and the stay of recovery until the appeal's final disposal.

In conclusion, the Tribunal's detailed analysis of the Service Tax liability on specific activities, interpretation of relevant legal provisions, and application of the CBEC Circular resulted in the decision to grant the waiver of pre-deposit amounts and stay the recovery pending the appeal's outcome.