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2019 (3) TMI 248 - AT - Service TaxBusiness Auxiliary Service - it is alleged that laying of pipes and joining them amounts to processing of goods not amounting to manufacture - Held that - Business Auxiliary Service introduced w.e.f. 31.03.2005 includes production or processing of goods for, or on behalf of the client - In this case, the appellant is merely laying the pipes which are already bought by their clients and they are charging a sum for laying them so. These activities are in the nature of installation of pipes - It is hard to hold that such installation of pipes which includes joining them amounts to processing of the pipes. The demand under Business Auxiliary Service from the appellant is unsustainable - appeal allowed - decided in favor of appellant.
Issues involved:
1. Whether the activity of laying and joining PVC pipes amounts to processing of goods chargeable to service tax under Business Auxiliary Service. 2. Whether the demand for service tax, interest, and penalties imposed on the appellant is sustainable. 3. Whether the activity of laying and joining PVC pipes is exempt under notification No. 14/2004-ST related to agriculture. 4. Whether the activity is taxable under Business Auxiliary Service w.e.f. 31.03.2005 and not taxable for the period prior to this date. 5. Whether there was suppression of facts regarding the taxability of the activity by the appellant. Analysis: 1. The appellant, a manufacturer of PVC pipes, was charged service tax by the department for laying and joining the pipes under the category of Business Auxiliary Service. The lower authority confirmed the demand, stating that the activity amounts to processing of goods not amounting to manufacture. However, the Tribunal found that the mere laying and joining of pipes does not constitute processing of goods. The installation of pipes by the appellant for their clients does not involve any processing of the pipes. Therefore, the demand under Business Auxiliary Service was deemed unsustainable, and the appeal was allowed, setting aside the order. 2. The appellant argued that the demand for service tax, interest, and penalties was not sustainable. The Tribunal agreed with the appellant, stating that since the activity of laying and joining PVC pipes does not amount to processing of goods, the demand for service tax, interest, and penalties was set aside. The Tribunal found no merit in the demand and ruled in favor of the appellant. 3. The appellant contended that the activity of laying and joining PVC pipes should be exempt under notification No. 14/2004-ST related to agriculture. However, the Tribunal did not specifically address this argument in the judgment, as the main focus was on whether the activity fell under Business Auxiliary Service and was taxable. 4. The appellant also argued that if the activity is taxable under Business Auxiliary Service, it should only be taxable w.e.f. 31.03.2005 and not for the period prior to this date. The Tribunal did not find it necessary to rule on this argument as the main issue was whether the activity constituted processing of goods chargeable to service tax. 5. The appellant claimed that there was no suppression of facts regarding the taxability of the activity, as they had paid service tax for some period based on a mistaken understanding of the law. The Tribunal did not find any suppression of facts and concluded that the demand for service tax, interest, and penalties was not sustainable, ultimately ruling in favor of the appellant.
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