2013 (12) TMI 913 - AT - Service Tax

Demand of service tax - Extended period of limitation - Management, Maintenance and Repair Services - Eligibility to exemption under Notification No.12/2003-ST dated 26.2.2003 - Held that - In such matters involving different views given by Tribunal invoking extended period for demanding tax is prima facie not justifiable - Conditional stay granted.

Summary

Issues:
1. Whether the value of materials used in providing repair services should be included in the taxable value for service tax calculation.
2. Whether the belief of the applicant that the value of materials need not be included in taxable value was reasonable and bonafide.
3. Whether the extended period for demanding tax is justifiable in cases where there were conflicting decisions by the Tribunal.

Analysis:

Issue 1:
The applicants, engaged in repairing marine containers, did not include the value of materials like doors, panels, nuts, bolts, etc., used in providing services while paying service tax. They claimed exemption under Notification No.12/2003-ST. The contention was based on previous Tribunal decisions. The applicant relied on a case where it was held that the value of materials need not be included, thus arguing against the demand for tax for the period from October 2004 to September 2009. The Tribunal noted the conflict in decisions and ordered a pre-deposit of Rs.30,00,000, considering the issue of including material value in taxable services.

Issue 2:
The Revenue argued that the applicant's belief that material value need not be included was not bonafide as it was not disclosed to the Department earlier. The Revenue relied on Tribunal decisions in other cases to counter the applicant's claim. The Tribunal considered this argument but did not find the belief unreasonable, especially given the conflicting decisions by the Tribunal on the matter. The Tribunal ordered a pre-deposit based on the specific circumstances of the case.

Issue 3:
The Tribunal acknowledged the conflicting decisions by different benches of the Tribunal on whether material value should be included in taxable services. In such cases, where there were divergent views by the Tribunal, invoking the extended period for demanding tax was deemed prima facie unjustifiable. The Tribunal emphasized the need for clarity in such matters and ordered the pre-deposit, taking into account the complexity and differing interpretations in previous decisions.

This judgment highlights the importance of consistency and clarity in tax matters, especially when there are conflicting interpretations by different benches of the Tribunal. The Tribunal's decision to order a pre-deposit while considering the specific circumstances of the case reflects a balanced approach to resolving disputes related to the inclusion of material value in taxable services.