2019 (2) TMI 1427 - AT - Service Tax

Classification of services - Business Auxiliary service or not - miscellaneous income received as documentation charges/ other charges - High Seas Sale - contradiction in the facts - Held that - It has been argued in the impugned order that the said imported goods namely, valves are used by different manufacturer as well as consumers. A specification and other warranty certification, drawing process test certification, valves test certification, instruction and maintenance manually etc. required to be given in number of sets as per requirement of client. Consequently, the documents in thousands of pages are required to be given to the client namely the buyer of High Seas Sales product. On perusal of the appeal memorandum as well as defence made by the appellant before lower authority shows that they have claimed that thus documentation is made in respect of valves manufactured and sold by them to their client. In none of the document, it has been asserted that the said documentation is made in the course of High Seas Sales. From the discussion in the impugned order, it is apparent that the same has been passed on presumption that the entire transaction is in respect of High Seas Sales of goods imported by the appellant to various client of overseas supplier. From the submission made by the appellant before original adjudicating authority as well as Tribunal, it is seen that the appellant have claimed that the documentation provided by them to their client is in respect of valves manufactured and supplied by them, thus there is contradiction in facts. The matter remanded back to the original adjudicating authority to decide the matter afresh clearly stating the facts and identifying the specific Clause of definition of business auxiliary service where the revenue seeks to classify the said service - appeal allowed by way of remand.

Summary

Issues:
Confirmation of demand of service tax, interest, and imposition of penalty under Section 76 of the Finance Act, 1994.

Analysis:
The appeal was filed against the demand for service tax under the Business Auxiliary service head, specifically related to documentation charges and other charges received by the appellant. The appellant argued that their activities did not fall under the defined clauses of business auxiliary service, challenging the imposition of service tax. The impugned order identified the clause (vii) of the definition of business auxiliary service, considering the activity as incidental auxiliary to procurement of goods or services for the client. However, the appellant contended that the documentation provided was in relation to valves manufactured and supplied by them, not in the course of High Seas Sales as presumed by the authorities.

The impugned order held that the appellant engaged in High Seas Sales of goods to clients, preparing documents related to the sales, design, and specifications of the products. The authorities argued that the documentation charges were part of the services provided during High Seas Sales, falling under the definition of business auxiliary service. However, the appellant's submissions indicated that the documentation was specifically related to valves manufactured and sold by them, creating a contradiction in the facts presented. The Tribunal found the impugned order to be based on a presumption contrary to the actual facts and submissions made by the appellant.

As a result, the Tribunal set aside the impugned order and remanded the matter back to the original adjudicating authority for a fresh decision. The Tribunal directed the authority to clearly state the facts and identify the specific clause of the definition of business auxiliary service applicable to the services provided by the appellant. The appeal was allowed by way of remand, emphasizing the need for a proper classification based on factual evidence and adherence to the defined criteria of business auxiliary service.

This comprehensive analysis of the judgment highlights the key arguments, findings, and the ultimate decision of the Appellate Tribunal CESTAT AHMEDABAD regarding the demand for service tax, interest, and penalty under the Finance Act, 1994.