2009 (6) TMI 67 - AT - Service Tax

Technical Inspection and Certification Service held that - activities of the appellant are pre-requisites for any client in India to obtain ISO certification. However, the certification relates only to management system or management processes. The Principles of Ejusdem Generis is clearly applicable in the interpretation of the word process which is found in the definition of Technical inspection and Certification Service . No doubt, the said word process keeps company with the other words goods or material or immovable property - We are convinced that these inspections relates only to activities connected with matter. In other words, the process mentioned in the definition could relate only to physical and chemical processes - appellant has carried out the audit of quality of various schools and organizations. Obviously, these processes would not relate to matter or immovable property demand is not sustainable on merit as well as on the ground of period of limitation.

Summary

Issues:
1. Whether the activity carried out by the appellant falls within the category of taxable service 'Technical Inspection and Certification Agency' as per Section 65(108) of the Finance Act, 1994.
2. Whether the extended period invoked in the show cause notice dated 7.1.2005 for demanding Service Tax for the period from 1.7.2003 to 31.3.2004 is sustainable.

Issue 1:
The appellant, an American Quality Assessors (India) Pvt. Ltd., was charged with Service Tax for technical inspection and certification services. The appellant argued that their activities, related to quality management systems, did not fall under the definition of 'Technical Inspection and Certification Agency' as they did not deal with goods, processes, materials, or immovable property. They contended that the term 'process' in the definition should be interpreted in the context of inanimate objects and not management processes. The appellant highlighted that their audits did not result in issuing certificates, which was done by AQA-USA. The Tribunal agreed with the appellant, applying the Rule of Construction Noscitur A Sociis and the Principles of Ejusdem Generis to interpret the term 'process' in conjunction with 'goods, material, and immovable property'. The Tribunal ruled that the appellant's activities did not fall within the taxable service category of 'Technical Inspection and Certification Agency'.

Issue 2:
The appellant claimed that they had voluntarily approached the Department regarding the taxability of their services in August 2003, but the show cause notice issued in January 2005 invoked the extended period for demanding Service Tax. The Tribunal noted that the extended period is applicable only in cases of suppression of facts, misstatement, or fraud with an intent to evade tax. As the conditions for invoking the extended period were not met in this case, the Tribunal held that the longer period was not sustainable. Consequently, the Tribunal set aside the impugned order and allowed the appeal with consequential relief.

In conclusion, the Appellate Tribunal CESTAT, Bangalore, in its judgment dated 23.06.2009, ruled in favor of the appellant, holding that their activities did not qualify as taxable services under the category of 'Technical Inspection and Certification Agency'. Additionally, the Tribunal found that the extended period invoked in the show cause notice for demanding Service Tax was not sustainable due to the absence of grounds for its application. The appeal was allowed with consequential relief, and the impugned order was set aside.