2015 (12) TMI 818 - AT - Service Tax

Classification of service - management, maintenance or repair service or Business Auxiliary Service - Held that - assessee undertakes re-rubberisation of old and unused spindles for the printing industry by coating old and unused spindles with rubber compounds, (the spindles being supplied by customers); thereafter vulcanizing the rubber; thus rendering the spindles fit for use and supplying the re-furbished spindles back to the customers. The assessee classified this activity as business auxiliary service (BAS) and in view of the Notification No. 14/2004-ST dt. 10/09/2004 as amended by Notification No.19/2005-ST dt. 07/06/2005 (whereby all taxable services provided in relation to printing was exempted from the whole of service tax leviable thereon), the assessee assumed that there was no liability to tax. - In the assessee/appellant s own case, reported in 2013 (12) TMI 620 - CESTAT NEW DELHI , an identical activity of the appellant was classified by the Tribunal as falling under BAS, negating Revenue s contention that it should be classified as MMR service. - Decided in favour of assessee.

Summary

Issues:
Classification of service as Management, Maintenance or Repair (MMR) service or Business Auxiliary Service (BAS) for service tax liability.

Analysis:

1. The appellant appealed against the order of the Commissioner (Appeals-II), Hyderabad, which confirmed a service tax demand of &8377; 15,41,582 for providing management, maintenance, or repair (MMR) service related to re-rubberisation of spindles for the printing industry.

2. The primary issue was whether the activity of re-rubberisation of spindles by the appellant constituted a taxable MMR service or a non-taxable BAS. The appellant considered it as BAS, relying on a notification exempting all taxable services related to printing from service tax.

3. The primary adjudication order and the subsequent impugned order upheld the Revenue's claim that the service provided by the appellant fell under MMR service, leading to the imposition of service tax.

4. However, the Tribunal referred to a previous decision in the appellant's own case where a similar activity was classified as BAS, not MMR service. The Tribunal's earlier ruling established that if the activity is considered BAS, it falls within the scope of the exemption notification, thereby exempting it from service tax liability.

5. Consequently, the Tribunal found that the orders of the primary and lower appellate authorities were unsustainable, invalid, and quashed them. The appeal was allowed, and no costs were imposed on the appellant.

6. The judgment was pronounced and dictated in open court, with the Tribunal ruling in favor of the appellant based on the classification of the service activity as BAS rather than MMR, leading to the exemption from service tax liability.

This detailed analysis of the judgment highlights the key legal issues, the arguments presented by the parties, the Tribunal's reasoning, and the final decision rendered in favor of the appellant based on the classification of the service activity as Business Auxiliary Service.