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2020 (4) TMI 602 - AT - Service TaxLevy of service tax - Business Support Services - facilities and utilities which are provided by the appellants to M/s. ALIHPL as per the said contract are in the nature of infrastructural support services - HELD THAT - The present appeal is squarely covered by the decision of this Tribunal in the case of AIR LIQUIDE NORTH INDIA (P.) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, JAIPUR 2011 (12) TMI 412 - CESTAT, NEW DELHI where it was held that the expression support service of business or commerce would cover only the services of supporting nature for the main business - manufacture, trading or services - like services relating to marketing, customer relationship, distribution and logistics, accounting and transaction processing, office infrastructure, etc. and would not include service of renting of machinery and equipment for production or manufacture which being services relating to manufacturing activity are of altogether different nature. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Demand of Service Tax under the category of 'Business Support Services'. 2. Recovery of interest on the amount of Service Tax. 3. Imposition of penalty under Section 76 of the Finance Act, 1994. 4. Imposition of penalty under Section 77(1)(a) of the Finance Act, 1994. 5. Imposition of penalty for non-filing of ST-3 returns under Section 70 of the Finance Act, 1994. Detailed Analysis: 1. Demand of Service Tax under the category of 'Business Support Services': The proceedings were initiated against the appellants for demanding service tax under the category of 'Business Support Services'. It was revealed that the appellants had entered into a contract with M/s. Air Liquide India Holding Pvt. Ltd. (ALIHPL) to provide a permanent supply of Floxal Nitrogen Gas. As per the contract, the appellants provided various facilities such as power supply, cooling water, site lighting, fire extinguishers, telephone lines, site fencing, and land for the FLOXAL unit. The authorities adjudicated that these facilities constituted 'infrastructural support services' under 'Business Support Services' and were liable for Service Tax effective from 01.05.2006. 2. Recovery of interest on the amount of Service Tax: The Assistant Commissioner confirmed the recovery of interest on the Service Tax amount of ?1,16,535 under Section 75 of the Finance Act, 1994. This was upheld by the Commissioner (Appeals). 3. Imposition of penalty under Section 76 of the Finance Act, 1994: A penalty was imposed on the appellants under Section 76 of the Finance Act, 1994, calculated as ?100 per day during which the failure continued or 1% of the Service Tax amount per month, whichever was higher, subject to a maximum of 50% of the confirmed Service Tax amount. 4. Imposition of penalty under Section 77(1)(a) of the Finance Act, 1994: The Assistant Commissioner imposed a penalty of ?10,000 on the appellants for contravening the provisions of Section 69 of the Finance Act, 1994, read with Rule 4 of the Service Tax Rules, 1994. This imposition was upheld by the Commissioner (Appeals). 5. Imposition of penalty for non-filing of ST-3 returns under Section 70 of the Finance Act, 1994: A penalty of ?20,000 per return was imposed on the appellants under Section 70 of the Finance Act, 1994, read with Rule 7C of the Service Tax Rules, 1994, for non-filing of ST-3 returns. This was also upheld by the Commissioner (Appeals). Tribunal's Decision: The Tribunal found that the issue involved was covered by its earlier decision in the case of Air Liquide North India (P) Ltd., where it was held that providing storage tanks and machinery for rent did not fall under 'support service of business or commerce' as defined in Section 65(104c) of the Finance Act, 1994. The Tribunal applied the principle of 'Noscitur a Sociis' and concluded that 'support service of business or commerce' should be interpreted to cover services of a supporting nature for main business activities like marketing, customer relationship, logistics, etc., and not the renting of machinery and equipment for production or manufacture. Following the precedent, the Tribunal set aside the orders of the lower authorities, allowing the appeal and pronouncing the order in the open court.
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