2012 (8) TMI 242 - AT - Service Tax

Installation, Erection and Commissioning Service Held that - Appellant are clearing the solar system through dealers also and the dealers further sell it to the customers and charge certain amount for installation - appellant are not charging installation charges separately, but for installation activity, they are liable to pay service tax - activity of installation of solar system falls under the category of Erection, Installation and Commissioning Service - matter remanded back to the original adjudicating authority to consider the records, documents for computation of service components in the activity of the appellant

Summary

Issues: Appeal against service tax demand on installation activity without separate charges and quantification of service component.

Analysis:
1. Issue of Liability for Service Tax on Installation Activity: The appellant, engaged in manufacturing solar water heater systems, faced a service tax demand for installation activities falling under the category of Installation, Erection, and Commissioning Service. The department contended that service tax was applicable as the appellant did not charge separately for installation. The appellant argued that they were exempt from excise duty on the solar systems and did not charge extra for installation, hence not liable for service tax. However, the Tribunal held that even though the appellant did not charge separately for installation, the activity still attracted service tax under the service category.

2. Quantification of Service Component: The key issue revolved around quantifying the service component for the installation activity. The appellant provided data for computing the service component, which the adjudicating authority did not consider before confirming the demands. The Tribunal noted that while the appellant did not charge separately for installation, they needed to pay service tax on the activity. The matter was remanded back to the adjudicating authority to properly examine the data provided by the appellant for determining the service component and to pass an appropriate order in accordance with the law.

3. Appellate Tribunal's Decision: After considering submissions from both sides, the Tribunal found that the appellant's activity of installing solar systems indeed fell under the service category. The Tribunal acknowledged the need to quantify the service component accurately based on the data provided by the appellant. Consequently, the Tribunal disposed of the appeal and stay application by remanding the matter back to the adjudicating authority for proper examination and determination of the service component, emphasizing the importance of following due process and legal requirements in such cases.

In conclusion, the judgment addressed the liability for service tax on installation activities, the importance of quantifying the service component accurately, and the necessity of following proper procedures and legal principles in resolving such disputes.