2023 (9) TMI 1138 - AT - Service Tax

Classification of service - Business Auxiliary Service or not - carrying out certain jobs by utilizing the Steam Generating Unit - HELD THAT - As per the agreement the appellant has to provide various services by utilizing Steam Generating Unit but held by this Tribunal, the said activities does not fall under business auxiliary service prior to 26.05.2008, therefore, demand of service tax under the category of business auxiliary service is not sustainable against the appellant. The appellant is not liable to pay service tax on their activity - impugned order set aside - appeal allowed.

Summary

Issues involved: Applicability of service tax on activities involving steam generation and interpretation of business auxiliary service.

For the first issue, the appellant, a small scale industry unit, was awarded a contract by ONGC for hiring steam generating units. The appellant installed and operated the units for various tasks specified in the agreement. The central issue was whether the activity of steam generation amounted to manufacture under section 2(f) of the Central Excise Act, 1944, and whether service tax was applicable. The appellant, availing SSI Exemption, did not obtain central excise registration during the relevant period. A notice demanding service tax was served, leading to the current appeal.

Regarding the interpretation of business auxiliary service, the Tribunal referred to a previous case involving crane hire services provided to ONGC. In that case, it was held that the activities did not fall under business auxiliary service prior to a specific date. Applying the same reasoning to the present case, the Tribunal found that the appellant's activities using the steam generating unit did not qualify as business auxiliary service before a certain date. Therefore, the demand of service tax under this category was deemed unsustainable.

In conclusion, the Tribunal ruled in favor of the appellant, stating that they were not liable to pay service tax on their activities involving the steam generating unit. The impugned order demanding service tax was set aside, and the appeal was allowed with any consequential relief deemed necessary.