2019 (5) TMI 513 - AT - Service Tax

Nature of activity - sale or service - hiring charges - deemed sales - principles of natural justice - HELD THAT - It was submitted before the original authority that the said consideration on which Service Tax was demanded was subjected to sales tax and original authority has not relied upon any evidence to establish that the said contention was unfounded - we have also perused the invoices which were available on record which clearly indicated that the entire transactions in such invoices was subjected to sales tax. Appeal allowed - decided in favor of appellant.

Summary

Issues: Service Tax liability on hiring charges for repair and maintenance services.

Analysis:
1. Common Issue Involving Multiple Appeals: The judgment pertains to three appeals arising from two impugned order-in-originals concerning a Service Tax assessee engaged in manufacturing automation machineries. The appeals were consolidated due to a common issue involving the payment of Service Tax on hiring charges for repair and maintenance services provided by the appellant.

2. Factual Background and Proceedings: The appellant entered into contracts with customers, supplying spares kept at the customers' premises for immediate use in machinery repair and maintenance. The Revenue alleged non-payment of Service Tax on transactions where invoices mentioned "hire charges (right to use)" as consideration for repair and maintenance services. Show cause notices were issued, leading to the adjudication of demands and penalties against the appellant.

3. Appellant's Arguments: The appellant contended that the transactions were sales subject to sales tax, and Service Tax was already paid on the service component. They argued that treating the sales as deemed sales and paying sales tax exempted them from Service Tax liability, supported by judicial pronouncements and invoices showing sales tax payment.

4. Revenue's Stand: The Revenue, represented by the Assistant Commissioner, supported the findings of the original authority, maintaining the Service Tax liability on the hiring charges for repair and maintenance services.

5. Judicial Analysis and Decision: After considering submissions and perusing records, the Tribunal found that the transactions in question were indeed subjected to sales tax, as evidenced by the invoices on record. The Tribunal concluded that the original orders demanding Service Tax were not sustainable, as the transactions attracting sales tax were not liable for additional Service Tax. Consequently, the Tribunal set aside the impugned orders and allowed all three appeals, disposing of the Miscellaneous Application as well.

In conclusion, the judgment resolved the issue of Service Tax liability on hiring charges for repair and maintenance services in favor of the appellant, emphasizing the applicability of sales tax on the transactions as a basis for exempting them from additional Service Tax obligations.