2015 (1) TMI 955 - AT - Service Tax

Waiver of pre deposit - Maintenance or repair service - Absence of agreement - Held that - In the absence of an agreement the service tax cannot be levied on repair work undertaken. We find that the decision applies to the facts of this case. Therefore following decision in 2011 (7) TMI 949 - CESTAT CHENNAI in this case also the requirement of pre-deposit is waived and stay against recovery is granted during the pendency of appeal. - Stay granted.

Summary

Issues:
1. Taxability of services provided by the appellant under 'maintenance or repair service'.
2. Requirement of agreement or contract for levy of service tax on repair work.
3. Validity of demand for service tax, interest, and penalties imposed on the appellant.

Issue 1: Taxability of services provided by the appellant under 'maintenance or repair service'
The appellant provided services related to commissioning of electric equipment, appliances, and maintenance and repair of AC motors and generators. The service was deemed taxable under 'maintenance or repair service' from 1.7.2013, as per the amended definition effective from 16.6.2005. The appellant did not have service tax registration or pay service tax on these services from 1.7.2003. A show cause notice was issued, resulting in a demand for service tax amounting to Rs. 2,766 for the period 2.4.2004 to 31.5.2005 and Rs. 6,58,854 for the period 16.6.2005 to 24.6.2008, inclusive of education cess. Additionally, interest and penalties under Section 77 and Section 78 of the Finance Act, 1994 were imposed.

Issue 2: Requirement of agreement or contract for levy of service tax on repair work
The appellant argued that there was no agreement or contract in place for the services provided by them. The definition of 'Maintenance, Management or Repair' service underwent multiple amendments during the relevant period. The appellant contended that for repair services, an agreement or contract was necessary, which was lacking in their case. The absence of documentary evidence supporting the existence of agreements or work orders was highlighted. The appellant's submissions were accepted, noting that there was no written agreement in any of the cases based on the documents reviewed, such as invoices without references to purchase or work orders.

Issue 3: Validity of demand for service tax, interest, and penalties imposed on the appellant
The appellant relied on a precedent, Zenith (Bangalore) Rollers Pvt. Ltd.: 2012 (25) S.T.R. 57 (Tri.-Chennai), to support their argument that in the absence of an agreement, service tax cannot be levied on repair work. The tribunal found the precedent applicable to the current case, leading to the waiver of the pre-deposit requirement and granting a stay against recovery during the appeal's pendency. This decision emphasized the importance of having a valid agreement or contract for the levy of service tax on repair services, aligning with the appellant's position.

This detailed analysis of the judgment provides insights into the taxability of services, the necessity of agreements for service tax levy, and the tribunal's decision on the demand for service tax, interest, and penalties imposed on the appellant.