2013 (10) TMI 957 - AT - Service Tax

Waiver of pre deposit - Retreating of old tyres - Held that - The appellants are carrying out retreading of old tyres used in motor vehicles. Revenue proceeded against the appellants on the ground that they were not including the value of materials such as tread rubber, cushion gum, vulcanizing solution, which were used/consumed in the activity of retreading/reconditioning of tyres in the value of taxable services for the purpose of payment of Service Tax - There are contrary decisions on the issue, the assessee cannot be faulted with, for his entertaining a bonafide belief about the valuation of such services and his contention for granting waiver of pre-deposit. We find that appellant has made out a prima facie case for the waiver of amounts involved - Following decision of Chakita Ranjini Udyam Versus Commissioner of Central Excise, Customs & Service Tax, Mysore 2009 (3) TMI 135 - CESTAT, BANGALORE - Therefore, appellants are entitled for the benefit of the Notification No. 12/2003 - stay granted.

Summary

Issues:
- Confirmation of demand of service tax, interest, and penalties for Tyre Re-treading services.
- Interpretation of Notification No. 12/2003-ST regarding billing of materials separately.
- Contradictory decisions by different Tribunal benches on extending benefits to Tyre Re-treading services.

Analysis:
The judgment by the Appellate Tribunal CESTAT AHMEDABAD addressed the issue of confirming the demand of service tax, interest, and penalties for Tyre Re-treading services. The lower authorities had imposed these on the appellants for allegedly not discharging the correct service tax liability. The appellants claimed to bill materials separately on the invoices for re-treading services. The Tribunal noted that the invoices did indicate the cost of material and labor separately, supporting the appellants' argument. The decision in the case of Chakita Ranjini Udyam was cited, where it was held that if materials are billed separately and sold along with services, the benefit of Notification No. 12/2003-ST should be extended.

Regarding the interpretation of Notification No. 12/2003-ST, the Tribunal considered the contradictory decisions by different benches. The departmental representative relied on the case of Safety Retreading Company (P) Limited, where it was held that benefits of the notification cannot be extended to Tyre Re-treading Companies. However, the Tribunal noted the contradiction between this decision and the one in Chakita Ranjini Udyam. The Tribunal, including one of the judges from the latter case, concluded that due to the conflicting decisions, the appellant could not be faulted for having a bona fide belief about the valuation of services. As a result, the Tribunal found that the appellant had made out a prima facie case for the waiver of amounts involved.

In light of the above analysis, the Tribunal allowed the applications for the waiver of pre-deposit of amounts involved and stayed the recovery thereof until the disposal of appeals. This decision highlights the importance of considering conflicting decisions and the interpretation of relevant notifications in tax matters, providing relief to the appellants based on the specific circumstances and legal arguments presented before the Tribunal.