2012 (10) TMI 135 - AT - Service Tax

Demand of service tax - appellants are clearing the solar system through dealers also and the dealers further sell it to the customers and charge certain amount for installation Held that - 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 . Quantification of service component Held that - Appellants has provided the data for computation of service component from the sales effected during the impugned period and the same has not been considered by the adjudicating authority - matters remanded back to the original adjudicating

Summary

Issues: Appeal against service tax demand for installation, erection, and commissioning of solar water heater systems.

Analysis:
1. Facts of the Case: The appellants, manufacturers of solar water heater systems, were selling and installing the systems without charging separately for installation. The department demanded service tax on the installation activity under 'Installation, Erection and Commissioning Service' category.

2. Appellant's Argument: The appellants contended that they are engaged in manufacturing activity, exempt from excise duty, and not liable to pay service tax on installation as they do not charge separately for it. They provided cost data to support their claim, which was not considered by the adjudicating authority.

3. Department's Argument: The department argued that since the appellants did not provide a separate service component in their invoices, they are liable to pay service tax on 33% of gross receipts for installation activity.

4. Tribunal's Decision: The Tribunal observed that even though the appellants did not charge separately for installation, they were still liable to pay service tax for the activity. The issue was the quantification of the service component, which the adjudicating authority failed to consider. The Tribunal remanded the matter back to the authority for proper examination and computation of the service component based on the data provided by the appellants.

5. Precedent: The Tribunal cited a similar case involving Kaushal Solar Equipments where the matter was remanded for computation of the service component. Following the precedent, the Tribunal remanded the present case for further examination and appropriate orders.

6. Conclusion: The Tribunal disposed of the appeals and stay applications by remanding the matter back to the adjudicating authority for reconsideration of the service component calculation and issuance of appropriate orders in accordance with the law.