2024 (3) TMI 69 - AT - Service Tax

Non-payment of service tax - Business Auxiliary Service - Manpower Recruitment or Supply Agency Service - Management or Repair Service - amount which has been received by them from the Heavy Water Board, Department of Atomic Energy - issuance of two SCN - for the same activity, the second show cause notice has demanded service tax under the categories of Business Auxiliary Service, Manpower Recruitment or Supply Agency Service and Maintenance or Repair Service - time limitation - HELD THAT - It is found that two show cause notices, first dated 16.06.2005 and second dated 01.05.2009 have been issued on the same facts of the matter. However, in the first show cause notice, service tax has been demanded under the category of Maintenance or Repair Service while in the second show cause notice the demand has been made invoking extended time proviso alleging suppression of facts etc and service tax has been demanded under the categories Business Auxiliary Service, Manpower Recruitment or Supply Agency Service and Maintenance or Repair Service. The Adjudicating Authority has decided both the show cause notices on the same date i.e. 28.12.2012 and has confirmed the demand of service tax for the for the same set of activities undertaken by the appellant under two categories of services namely Maintenance or Repair Service and in the second order-in-original under Business Auxiliary Service, Manpower Recruitment or Supply Agency Service, and Maintenance or Repair Service - the confirmation of demand of service tax for the same activity i.e. manufacturing of Heavy Water of nuclear grade for Department of Atomic Energy under the different categories by the Adjudicating Authority clearly indicates no application of judicious mind and demand has been confirmed in a perfunctory manner without any cogent reasons. The definition of term manufacture as provided under Section 2(f) of Central Excise Act, 1944 is an inclusive definition which says that activity of manufacture and resulted into a new and identifiable product having distinct name, character and use . Section 2(d) of Central Excise Act, 1944 provides the definition of excisable goods and says that excisable goods are one which is specified in the first and second schedules of the Central Excise Tariff Act, 1985 - the process of converting deuterium into Heavy Water is nothing but manufacturing of Heavy Water as defined under Section 2(f) of Central Excise Act, 1944. It is also opined that merely because Heavy Water falling under Chapter 28.45 of the Central Excise Tariff Act, 1985 attracts nil rate of duty will not make it non-excisable goods. Time Limitation - HELD THAT - On the issue of second show cause notice being time-barred, it is clear from the facts of the matter that first show cause notice was issued on 16.06.2005 demanding service tax on the same set of activities for the period 01.07.2003 to 31.03.2004 and the second show cause notice was issued by the department on 01.05.2009 covering the period 2004 to November 2006 invoking extended time proviso under Section 73 of the Finance Act, 1994 on the same set of activities of the operation of Heavy Water plant by the appellant. Since the department was already aware about the activities undertaken by the appellant and the show cause notice has already been issued on 16.06.2005 still they proceeded to issue second show cause notice without providing any reason - on this very count also second show cause notice is clearly time-barred and therefore need to be set-aside on the ground of limitation. The impugned orders-in-original are without any merit and therefore, the same is set aside - Accordingly, the appeals are allowed.

Summary

Issues Involved:
1. Classification of services for tax purposes.
2. Applicability of service tax on the operation and maintenance of the Heavy Water plant.
3. Legality of demanding service tax under multiple service categories for the same activity.
4. Validity of extended time proviso for issuing the second show cause notice.

Summary:

Classification of Services:
The appellant faced two show cause notices. The first, dated 16.06.2005, demanded service tax under "Maintenance or Repair Service" for the period July 2003 to March 2004. The second, dated 01.05.2009, demanded service tax for the period April 2004 to November 2006 under "Business Auxiliary Service," "Manpower Recruitment or Supply Agency Service," and "Maintenance or Repair Service." The Adjudicating Authority confirmed the demands without clear reasoning, indicating a lack of judicious application of mind.

Applicability of Service Tax:
The appellant argued that the operation and maintenance of the Heavy Water plant, which produces Heavy Water (an excisable good under CETH 28.45 attracting nil duty), should not be classified under "Maintenance or Repair Service" for the period prior to 16.06.2005. The Tribunal agreed, noting that the Heavy Water plant is not movable property and therefore does not fall under the definition of "goods" or "equipment" for service tax purposes.

Legality of Demanding Service Tax under Multiple Categories:
The Tribunal found that the Adjudicating Authority's confirmation of service tax under multiple categories for the same activity was erroneous. The appellant's primary activity was the operation and maintenance of the Heavy Water plant, which falls under manufacturing, not service provision. The Tribunal emphasized that the consideration received was primarily for the production of Heavy Water, and other activities were incidental.

Validity of Extended Time Proviso:
The Tribunal ruled that the second show cause notice, issued on 01.05.2009, was time-barred. The department was already aware of the appellant's activities when the first show cause notice was issued on 16.06.2005. The second notice was based on the same facts, and the extended time proviso could not be invoked. The Tribunal relied on the Supreme Court's decision in Nizam Sugar Factory vs. CCE, which held that subsequent notices on the same facts are time-barred.

Conclusion:
The Tribunal set aside the impugned orders-in-original, finding them without merit. The appeals were allowed, and the demands for service tax under various categories were dismissed.