2010 (2) TMI 712 - AT - Service Tax

Demand of service tax along with interest and penalty has been confirmed under the category of Technical Testing & Analysis Services - Appellants submits that the activity of Hydro testing of LPG cylinders has been done by them under Gas Cylinder Rules, 2004 - As in the case of Harshita Handling vs. CCE, Bhopal, 2010 -TMI - 75954 - CESTAT, NEW DELHI has held that testing of gas cylinder does not fall under the category of Repair & Maintenance service, and hence, no service tax is leviable on this activity - Matter remanded back to pass the order on merit.

Summary

Issues:
Appeal against demand of service tax under Technical Testing & Analysis Services category; Compliance with Section 35 F of Central Excise Act, 1994; Applicability of service tax on Hydro Testing of LPG cylinders; Requirement of pre-deposit for appeal; Interpretation of relevant case laws.

Analysis:
The appeal before the Appellate Tribunal CESTAT, DELHI was filed against the confirmation of demand for service tax, interest, and penalty under the category of Technical Testing & Analysis Services. The impugned order was dismissed due to non-compliance with Section 35 F of the Central Excise Act, 1994. The issue was considered to be narrow in scope, leading to a decision to dispose of the appeal after waiving the pre-deposit requirement with the consent of both parties.

The case revolved around the activity of Hydro Testing of LPG cylinders carried out by the appellants for a bottling plant. A show cause notice was issued, and demands were confirmed as the activity was categorized as Technical Testing & Analysis service. The appellants failed to comply with the pre-deposit directive by the lower appellate authority, resulting in the dismissal of the appeal. The appellants contended that the testing of gas cylinders fell outside the Repair & Maintenance service category, citing relevant case laws to support their argument.

During the hearing, the learned Advocate for the appellants referenced the decision in Harshita Handling vs. CCE, Bhopal, and Multi Tech Test House vs. CST, Hyderabad, to assert that service tax was not applicable to the Hydro Testing activity. On the contrary, the Department argued for a pre-deposit based on the strength of their case on merit.

After evaluating the submissions from both sides, the Tribunal referred to the precedents set by Harshita Handling and Multi Tech Test House cases. It was established that testing of cylinders was a statutory activity not liable to service tax. Consequently, the Tribunal granted a 100% waiver of pre-deposit for service tax, interest, and penalty. The matter was remanded to the lower appellate authority for a decision on merit without the need for pre-deposit, as the lower authority had not yet passed an order on the same.

In conclusion, the appeal was allowed by way of remand, with the waiver of pre-deposit and a direction for the lower appellate authority to decide on the merit of the case without insisting on pre-deposit.