2018 (12) TMI 1484 - AT - Service Tax

Classification of services - re-rubberisation of rollers provided by them to various customers/clients - whether classifiable under the category of Management, Maintenance or Repair Services or under the category of Business Auxiliary Services ? Held that - The issue decided in the case of M/S ZENITH ROLLERS LTD VERSUS COMMISSIONER OF CENTRAL EXCISE 2013 (12) TMI 620 - CESTAT NEW DELHI , where it was held that Activities of the appellants are equally classifiable under two services namely Business Auxiliary Service and Maintenance or Repair service. Since the service cannot be classified under clause a and b of Section 65A, clause c of Section 65A is attracted according to which service is classifiable under the sub-clause of Clause (105) of Section 65 which comes first. Business Auxiliary service is covered under Section 65(105)(zzb) and Management, Maintenance or Repair Service is covered under Clause 65(105)(zzr). Since Business Auxiliary Service comes first under Clause 65(105)(zzb), we hold that service is classifiable under Business Auxiliary Service. demand raised under the category of Management, Maintenance or Repair Service - Since the service is to be as Business Auxiliary Services (BAS) demand set aside.

Summary

Issues:
Classification of service for re-rubberisation of old rollers - Business Auxiliary Service or Management, Maintenance or Repair Service.

Analysis:
The case involved the classification of service provided by the appellants for re-rubberisation of old rollers. The Department contended that this activity fell under Management, Maintenance or Repair Service, while the appellants argued it should be classified as Business Auxiliary Service. The officers of DGCEI conducted investigations and issued a Show Cause Notice demanding Service Tax, interest, and penalties. The Commissioner confirmed the tax liability under Management, Maintenance or Repair Service, leading to the present appeal.

Upon hearing the parties, the Tribunal referred to a previous judgment in the case of Zenith Rollers Ltd., where similar activities were classified as Business Auxiliary Service. The Tribunal noted that the activities of the appellants involved processing goods on behalf of the client, falling under Business Auxiliary Service. Despite the Revenue's argument that re-rubberisation constituted re-conditioning and should be classified as Management, Maintenance or Repair Service, the Tribunal applied Section 65A which dictates classification based on specificity. Since Business Auxiliary Service was more specific and came first under the relevant clause, the Tribunal held that the service should be classified as Business Auxiliary Service.

Given the precedent set by the Zenith Rollers Ltd. case and the classification principles outlined in Section 65A, the Tribunal ruled in favor of the appellants. The impugned order demanding Service Tax under Management, Maintenance or Repair Service was set aside, and the appeal was allowed with consequential relief. The appellants were deemed not liable to pay Service Tax under Business Auxiliary Service, leading to the favorable outcome in the appeal.