2018 (6) TMI 195 - AT - Service Tax

Classification of services - Activity of re-rubberisation of rollers/spindles for printing industry - whether classified under maintenance or repair of service or Business Auxiliary Services? - Held that - Identical issue came up before the Tribunal in the case of Zenith Rollers Ltd 2013 (12) TMI 620 - CESTAT NEW DELHI , where it was held that the activity undertaken by appellant would fall under the category of business auxiliary service appellant is eligible for the benefit of notification No. 14/2004-ST, dt. 10.09.2004 which exempts the activity from payment of service tax liability - appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of service under "maintenance or repair service" or "business auxiliary service."

Analysis:
The appeal involved a dispute regarding the classification of the appellant's activity of re-rubberisation of rollers/spindles for the printing industry. The revenue authorities contended that the consideration received for this activity should be taxed under the category of "maintenance or repair service." The adjudicating authority upheld the demand for tax, interest, and penalties. The appellant argued that the issue had been settled in previous Tribunal judgments, citing the cases of Zenith Rollers Ltd and Neotech Products Pvt. Ltd.

Upon careful consideration, the Tribunal noted that the appellant's activities involved processes like removing old rubbers, cleaning spindles, applying bonding solution, and curing, which were considered as processing of goods on behalf of the client. The Tribunal referred to the definition of repair, re-conditioning, and restoration to original condition, and analyzed the classification under two categories: Business Auxiliary Service and Maintenance or Repair Service.

The Tribunal applied Section 65A, which dictates the classification of taxable services when they fall under multiple sub-clauses. Since the appellant's activities could not be classified under clauses (a) or (b) of Section 65A, the Tribunal applied clause (c) and classified the service under the sub-clause that occurs first. Business Auxiliary Service was found to come before Maintenance or Repair Service under the relevant sections, leading to the conclusion that the service should be classified under Business Auxiliary Service.

The Tribunal's decision was supported by the fact that the activity was considered as falling under the category of business auxiliary service in previous judgments. This classification made the appellant eligible for the benefit of an exemption notification that exempted the activity from the payment of service tax liability. Consequently, the impugned order was set aside, and the appeal was allowed.

In conclusion, the Tribunal's decision clarified the classification of the appellant's service, resolved the dispute between maintenance or repair service and business auxiliary service, and provided the appellant with the benefit of a tax exemption notification.