2017 (8) TMI 1227 - AT - Service Tax

Principles of Ejusdem Generis - Technical Inspection and Certification Service - demand on the ground that the appellants are certifying the process undertaken by the appellant s client s labs and as such are covered by the tax entry - Held that - the matter requires to be placed for final resolution of the scope of the tax entry technical inspection and certification for service tax purpose, during the relevant period before the Larger Bench of this Tribunal - matter referred to Larger Bench.

Summary

Issues:
Dispute over liability to pay service tax under 'Technical Inspection and Certification Service' category.

Analysis:
The judgment involved two appeals concerning the liability of the appellant to pay service tax under the category of 'Technical Inspection and Certification Service' as per Rule 65(108) of the Finance Act, 1994. The Original Authority had confirmed the demand of service tax, stating that the appellants' certification of their client's labs' processes fell under the tax entry. The appellant's counsel highlighted two Tribunal decisions, Quality Council of India and American Quality Assessors, which had conflicting views on the issue. The counsel argued that a reference to a Larger Bench was necessary for a proper resolution. The respondent argued that the Quality Council of India decision was more specific and recent, emphasizing the physical process undertaken by the appellant as a certifying body.

Upon hearing both sides and reviewing the case records and cited case laws, the Tribunal noted the similarity in material facts between the present appeal and the two decided cases. The Tribunal observed that while the American Quality Assessors case focused on physical and chemical processes, the Quality Council of India decision rejected the application of ejusdem generis principle to the tax entry, stating that 'goods' and 'immovable property' could not form a group. Despite a physical process of inspection being noted in the Quality Council of India case, the Tribunal found a fundamental difference in the application of principles in the two decisions. The Tribunal concluded that further discussion and distinction by another Coordinate Bench might not resolve the issue definitively. Therefore, the Tribunal directed the Registry to submit the appeal papers and relevant orders to the Hon'ble President, CESTAT, for the constitution of a Larger Bench to address the scope of the tax entry 'technical inspection and certification' for service tax purposes during the relevant period.