2011 (1) TMI 233 - AT - Service Tax

Demand along with interest and penalty - Repairs and Maintenance service - The department proceedings against the appellant was providing Repairs and Maintenance service of xerographic equipment and systems toners and printers and facsimile to various clients without obtaining any service tax registration nor paying any service tax on the amount received as remuneration from M/s. Xerox Modicorp Limited for providing the above service. The Commissioner (Appeals) in his order has found the appellant as a sub-contractor and the department has not challenged this finding of the Commissioner (Appeals) - The service agreement entered into between the appellant and the company it is clear that the appellant were to provide necessary services to products as assigned/authorised by coompany and protect the interest and reputation of company - The appellant have produced a certificate issued by company dated 14-8-2009 claiming that service tax liability on the service provided by the appellant having been included in the service liability discharged by them - The said certificate was not even before the lower adjudicating authority - Remanded to the lower adjudicating authority for limited purpose to verify the certificate and pass necessary order.

Summary

Issues:
1. Appeal against Order-in-Appeal No. SB(48)48/STC/2009 upholding lower adjudicating authority's order.
2. Service tax liability on repairs and maintenance services provided by the appellant.
3. Appellant's contention as a sub-contractor of XMC.
4. Interpretation of service agreement between appellant and XMC.
5. Department's challenge regarding appellant's status as a sub-contractor.
6. Applicability of previous Tribunal decision and CBEC clarification.
7. Commissioner (Appeals) finding appellant as a sub-contractor.
8. Remand to lower adjudicating authority for verifying certificate on service tax liability.

Analysis:
1. The appellant filed an appeal against the Order-in-Appeal upholding the lower authority's decision regarding the demand for service tax on repairs and maintenance services provided. The department initiated proceedings due to the lack of service tax registration and payment by the appellant for services rendered to XMC.

2. The appellant claimed to be a sub-contractor of XMC, arguing that service tax had already been paid by XMC and the liability to pay service tax was fixed on sub-contractors post a specific date. They presented a certificate from XMC supporting their claim as a sub-contractor.

3. The service agreement between the appellant and XMC was pivotal in determining the nature of their relationship. The agreement outlined the appellant's role in providing specific services authorized by XMC, raising questions about their status as a sub-contractor or service agency.

4. The lower adjudicating authority viewed the appellant as a service agency providing services to XMC customers, not as a sub-contractor. The department relied on a previous Tribunal decision and a CBEC clarification to support their stance that the appellant was liable for service tax.

5. The appellant distinguished the previous Tribunal decision, emphasizing the unique circumstances of their case. The Tribunal noted the Commissioner (Appeals) finding the appellant as a sub-contractor, which the department did not challenge, preventing them from raising the issue later.

6. After reviewing the records and submissions, the Tribunal remanded the case to the lower adjudicating authority to verify the certificate provided by the appellant regarding service tax liability, ensuring a fair opportunity for the appellant to present their case.

7. The judgment concluded by disposing of the appeal through remand, highlighting the need for further examination of the certificate and a fair hearing for the appellant before reaching a final decision.