2013 (10) TMI 535 - AT - Service Tax

Classification of Services replacement of old insulation - Maintenance or Repair Services or Erection, Commission and Installation Services - Benefit of Notification No 1/2006 Waiver of Pre-deposit - Held that - The appellant was in fact discharging the service tax liability under the category of Erection, Commission and Installation Services by claiming the benefit of Notification No 1/2006 and filing the returns regularly with the authorities - the question of limitation as raised by the learned counsel may arise - At the same time, on perusal of the definition of Maintenance or Repair Services, the services rendered by the appellant for replacement of old and worn out insulation can, prima-facie, merits classification under the head Maintenance or Repair Services - the arguments raised by both sides need deeper consideration stay granted partly.

Summary

Issues:
Classification of services under Maintenance or Repair Services vs. Erection, Commissioning, and Installation Services; Time-barring of show cause notice.

Analysis:
The appellant filed a stay petition seeking the waiver of pre-deposit of a confirmed service tax amount under Section 73(1) of the Finance Act, 1994, along with interest and penalty. The dispute revolves around the classification of services provided by the appellant. The appellant, engaged in Thermal Insulation of pipelines, claimed the services should be classified under Erection, Commissioning, and Installation Services, citing the specific inclusion of 'Thermal Insulation' in the definition effective from 16.6.2005. The appellant argued that they have been consistently filing returns showing the services as such. However, the adjudicating authority classified the service under Maintenance or Repair Services, contending that 'Thermal Insulation' does not cover replacement of old insulation. The appellant raised concerns about the time-barring of the show cause notice, acknowledging the demand for a specific period within the limitation.

The departmental representative countered, stating that replacing old insulation falls under Repair or Maintenance Services, not under Erection, Commissioning, or Installation Services. They highlighted that the work orders specifically mentioned the replacement of old insulation. After considering arguments from both sides and reviewing the records, the Tribunal found that the dispute primarily concerns the classification of services. While the appellant has been paying service tax under Erection, Commission, and Installation Services, the replacement of old insulation may align more with Maintenance or Repair Services based on the definition. To allow for deeper consideration, the Tribunal directed the appellant to deposit a specified amount within a deadline and report compliance. The decision on the waiver of pre-deposit for the remaining balance was deferred until further orders after compliance verification by the Deputy Registrar. The recovery of the balance amount was stayed pending the appeal's disposal.