2008 (5) TMI 255 - AT - Service Tax

Demand under Erection service appellant engaged in the manufacture of textile machineries is providing the service of installation and erection at the customers premises deduction of Installation and erection charges not sought and excise duty paid on whole amount in such case, there is no any justification for confirmation of service tax against the appellant when the excise duty was being paid on the entire amount - stay petition is allowed unconditionally

Summary

Issues:
Service tax liability on installation and erection charges in addition to manufacturing cost.

Analysis:
The Appellate Tribunal CESTAT, Ahmedabad dealt with the issue of confirming a service tax liability of Rs. 8,13,41,574 against the appellants, who are engaged in manufacturing textile machineries, for providing installation and erection services at customers' premises. The appellants argued that they had paid excise duty on the entire contracted amount, which included installation and erection charges, without seeking a separate deduction for these charges. The adjudicating authority confirmed the service tax demand, stating that the appellants did not provide a bifurcation of these charges from other manufacturing costs. However, the Tribunal noted that the appellants subcontracted the installation and erection work to independent agencies who were already paying service tax on the installed goods. Therefore, the Tribunal found no justification for confirming the service tax liability when excise duty was being paid on the entire amount.

Moreover, the Tribunal highlighted that if the appellants had deducted the installation and erection charges from the assessable value for central excise duty payment and paid service tax on that amount, they would have paid a lower total amount by approximately Rs. 3.60 lakhs. This led the Tribunal to conclude that the appellants had presented a prima facie case in their favor, warranting the unconditional allowance of the stay petition. The judgment was delivered by Ms. Archana Wadhwa, Member (J), and Shri B.S.V. Murthy, Member (T) at the Appellate Tribunal CESTAT, Ahmedabad.