2019 (5) TMI 1570 - AT - Service Tax

Classification of services - Business Auxiliary Services or Maintenance and repair service - service activities of Maintenance and Repairs as per the contract of Full Service Maintenance Agreements (FSMA) - HELD THAT - The issue is settled in the case of COMMISSIONER OF CENTRAL EXCISE ST, LTU, DELHI VERSUS M/S. XEROX INDIA LIMITED AND VICE-VERSA 2018 (3) TMI 1006 - CESTAT CHANDIGARH where it was held that for the period prior to 01.06.2007, no demand is sustainable under the category of Maintenance and Repair Service/ Business Support Service/ Business Auxiliary Service for the activity undertaken by M/s. Xerox as the services of Business Support Service and Maintenance and Repair along with material and the agreement cannot vivisect the amount of material supplied by M/s. Xerox. The assessee is not liable to pay the service tax under the category of Maintenance or Repair Service and the learned Commissioner has rightly dropped the demand under the category of Business Auxiliary Service - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the activity undertaken by the appellant for various contracts qualifies as Maintenance or Repair Service?
2. Whether the services in question qualify under the category of Business Auxiliary Service?

Analysis:

Issue 1: Maintenance or Repair Service
The case involved M/s. Xerox India Limited engaged in the business of maintenance and repair services for various contracts. The Tribunal referred to a previous order where it was established that the contracts entered into by M/s. Xerox were Works Contracts, and the company was liable to pay VAT on the material portion of the contract. The Tribunal held that M/s. Xerox was required to pay service tax only on the labor portion as per the decision in the Wipro GE Medical Systems Limited case. It was emphasized that if sales tax had been paid on materials used during maintenance, service tax could not be additionally charged. The Tribunal concluded that the demand for service tax under Maintenance or Repair Service was not sustainable, and thus, the appeals were allowed with consequential relief.

Issue 2: Business Auxiliary Service
Regarding the printing of bills activity, the Tribunal differentiated between printing bills and billing, stating that they were distinct activities. It was held that printing bills did not fall under the category of Business Auxiliary Service. The Tribunal dismissed the Revenue's appeal on this issue, stating that the services in question did not qualify as Business Auxiliary Service.

In conclusion, the Tribunal held that M/s. Xerox was not liable to pay service tax under the category of Maintenance or Repair Service, and the demand under Business Auxiliary Service was rightly dropped by the learned Commissioner. Consequently, the assessee's appeal was allowed, and the Revenue's appeal was dismissed.