2012 (12) TMI 478 - AT - Service Tax

Reconditioning of old and worn out rollers - not paying of Central Excise duty - service tax demand - assessee invoking period of limitation - Held that - Activity of reconditioning of old and worn out shells was liable to Service Tax only with effect from 16.6.2005. As in the present case the period involved in the present appeal is upto February, 2006, demand upto 16.6.2005 was not sustainable on merits. The period is upto February, 2006 for which the return is required to be filed on 25.4.2006, show cause notice stand issued on 27.4.2007 i.e. beyond the normal period of limitation. The appellants have reversed the credit in respect of pig iron used in the manufacture of excisable goods as also for re-shelling of old rollers. This fact stand duly reflected in their RG 23A Part II which was filed along with the return. As such, it cannot be said that the appellant has suppressed the activity of re-shelling of rollers from the Revenue with an intention to evade the duty, thus merits in the appellants plea of limitation. The demand is also held to be barred by limitation - in favour of assessee.

Summary

Issues:
1. Whether reconditioning of old and worn-out rollers amounts to providing services under maintenance and repair category for the purpose of Service Tax liability.
2. Whether the demand for Service Tax for the period July 2003 to February 2006 is sustainable.
3. Whether the demand is barred by limitation.

Analysis:

Issue 1:
The appellant, engaged in reconditioning old rollers, argued that without a maintenance contract, their activities did not fall under maintenance or repair services for Service Tax. They relied on a Tribunal decision and the definition of maintenance or repair services pre-16.6.2005. The Tribunal found that in the absence of a maintenance contract, the services provided did not fall under the taxable category. The definition was amended post-16.6.2005 to include reconditioning, but the Tribunal held that pre-amendment activities were not taxable under maintenance or repair services.

Issue 2:
The demand for Service Tax for the period July 2003 to February 2006 was contested on the grounds of limitation and lack of merit. The lower authorities upheld the demand, but the Tribunal found that the demand up to 16.6.2005 was not sustainable due to the absence of reconditioning in the pre-amendment definition. For the period post-amendment, the appellant argued against the limitation, citing proper reflection of activities in their records. The Tribunal agreed that the demand beyond the normal limitation period was unjustified, as the appellant had reversed credits and disclosed activities in their records.

Issue 3:
Regarding the limitation period, the appellant demonstrated proper disclosure and credit reversal for activities, including re-shelling old rollers. The Tribunal found that the demand was indeed barred by limitation and set aside the impugned orders, including penalties, in favor of the appellant.

In conclusion, the Tribunal allowed the appeal, ruling in favor of the appellant on all issues, setting aside the demand and penalties, emphasizing the importance of proper documentation and compliance with tax regulations.