2018 (8) TMI 956 - AT - Service Tax

Business Auxiliary Services - appellant undertook manufacture of forgings for others on job work basis and also undertook the work of heat treatment of forgings for other during the period from 09/2004 to 02/2005 - Held that - Reliance placed in the case of Hitech Industrial Lining Pvt. Ltd. Vs. Commissioner of C.Ex., Salem 2017 (8) TMI 837 - CESTAT CHENNAI , where it was held that The amendment was brought forth with effect from 16.6.2005 to include the production or processing of goods for, or on behalf of, the client. Thus, the activity of the appellant has become taxable with effect from 16.6.2005, demand upheld - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the appellants were engaged in business auxiliary services for job work done on forgings, leading to a demand for Service Tax, interest, and penalties.
2. Interpretation of the definition of "business auxiliary service" post-amendment by Finance Act, 2005 and its applicability to the manufacturing activities of the appellants.

Analysis:
1. The case involved M/s. Bhandari Precision Forgings Pvt. Ltd., who were alleged to have provided business auxiliary services under Section 65(19)(v) of the Finance Act, 1994 for job work and heat treatment of forgings. A Show Cause Notice (SCN) was issued demanding Service Tax, Education Cess, and penalties. The Assistant Commissioner confirmed the demand, which was upheld by the Commissioner (A), leading to the appeal before the Tribunal.

2. The appellants argued that post-amendment by the Finance Act, 2005, the definition of "business auxiliary service" only covered production or processing not amounting to manufacture. They contended that since their forgings amounted to manufacture as per Section 2(F) of the Central Excise Act, 1944, the demand for Service Tax on heat treatment for others was incorrect. They relied on precedents like Hitech Industrial Lining Pvt. Ltd. and Auto Coats to support their position.

3. The Departmental Representative acknowledged that the issue favored the appellants, as per the findings in the Original Order-in-Appeal (OIA) and Original Order-in-Original (OIO).

4. Upon hearing both parties and examining the records, the Tribunal found in favor of the appellants. Citing the precedents and the settled issue, the appeal was allowed, granting consequential relief.

5. The Tribunal's decision was pronounced in Open Court on 24/07/2018, setting aside the demand for Service Tax on the heat treatment activities undertaken by the appellants for others during the specified period, based on the interpretation of the definition of "business auxiliary service" post-amendment.