2017 (1) TMI 977 - AT - Service Tax

Erection, Commissioning and Installation Services - Management, Maintenance and Repair Services - period prior to 16.06.2005 and subsequent to that period till 30.09.2007 - demand of tax, interest and penalty - Held that - the appellant s job was to fabricate and erect the machinery in the factory of Ultratech, this would fall under the category of Erection, Commissioning and Installation Services; hence the service tax liability and interest thereof is upheld - a bonafide error might have occurred in the non-payment of service tax liability which was made good by the appellant on being pointed out. The provisions of Section 80 of finance Act, 1994 invoked penalty imposed u/s 76, 77 and 78 of Finance Act, 1994 is set aside - appeal disposed off - decided partly in favor of assessee.

Summary

Issues involved:
Service tax liability under "Management, Maintenance and Repair Services" for a specific period and demand of service tax under "Erection, Commissioning and Installation Services."

Analysis:

Management, Maintenance, and Repair Services:
The appeals were against the Order-in-Appeal confirming service tax demands for the period 16.06.2005 to 30.09.2007 under this category. The appellant did not contest these demands for the said period. The service tax liability and interest were upheld by the Tribunal. The appellant agreed to discharge the service tax liability and interest for this period.

Erection, Commissioning, and Installation Services:
Regarding the demand of service tax under this category, the appellant argued that the demand prior to 01.05.2006 was time-barred as the fabrication work undertaken was considered a manufacturing activity, not falling under service tax. The appellant had paid the service tax liability under this category along with interest. The Departmental Representative supported the lower authorities' findings.

The Tribunal found that the fabrication and erection of machinery by the appellant at Ultratech's factory constituted Erection, Commissioning, and Installation Services. The service tax liability and interest under this category were upheld. The Tribunal considered the penalties imposed under Sections 76, 77, and 78 of the Finance Act, 1994. It acknowledged the appellant's genuine belief that the fabrication work did not fall under the category of service tax. Given the appellant rectified the non-payment upon realization, the Tribunal invoked Section 80 of the Finance Act, 1994, setting aside the penalties imposed under Sections 76, 77, and 78.

The appeals were disposed of accordingly, with the judgment pronounced on 29/12/16 by the Tribunal.