2023 (9) TMI 1519 - AT - Service Tax

Levy of service tax - management, maintenance or repair services - manufacturing process carried out by the appellant under job-work for the principal M/s Gharda Chemicals Ltd. by using their plant machinery - HELD THAT - The issue is no longer res-integra in view of the decision of this Tribunal vide final order No. A/10706/2023 dated 24/03/2023 2023 (3) TMI 1173 - CESTAT AHMEDABAD . Wherein on the same issue in the appellant s own case, it was decided in favour of the appellant - it was held in the said case that 'the activity of the appellant is indeed manufacture of excisable goods in terms of section 2(f) of CEA, 1944. As per the definition of business auxiliary service manufacture of excisable goods in terms of section 2(f) of the Central Excise Act, 1944 is clearly excluded from the definition of business auxiliary service. For this reason also, the demand of service tax is not sustainable.' The issue is no longer res-integra, therefore, the impugned order is not sustainable - Appeal is allowed.

Summary

Issues involved:
Determining whether the manufacturing process carried out by the appellant under job-work for the principal company using their plant machinery is liable to Service Tax under the head of management, maintenance, or repair services.

Analysis:
The judgment revolves around the issue of whether the appellant's manufacturing process under job-work for the principal company is subject to Service Tax under specific categories. The appellant argued that a previous Tribunal decision favored them on the same issue, making the impugned order unsustainable. The Tribunal referred to the earlier decision where it was established that the activities of the appellant did not fall under Management, Maintenance, or Repair Service. The Tribunal emphasized that the service should belong to the service recipient, not the provider. Since the appellant used their own plant machinery for production on behalf of the principal company, the activities could not be classified as such services.

The Tribunal further analyzed the activities carried out by the appellant, highlighting that they were purely manufacturing excisable goods on a job work basis. The principal manufacturer supplied inputs and packaging materials to the appellant under specific rules. It was noted that the appellant's activities were of production or processing on behalf of the client, potentially falling under business auxiliary service. However, even if considered as such, the activities were exempt under a relevant notification. The Tribunal also clarified that the demand raised under Management, Maintenance, or Repair Service was incorrect classification, making the demand unsustainable.

Moreover, the Tribunal found that the appellant's activities constituted the manufacture of excisable goods, which was excluded from the definition of business auxiliary service. Therefore, the demand for service tax was deemed not sustainable. Ultimately, the Tribunal set aside the impugned order, allowing the appeal and providing consequential relief. The decision was based on the premise that the issue was no longer res-integra, following the earlier decision in the appellant's own case. The judgment concluded by setting aside the impugned order and allowing the appeal based on the established legal principles and precedents.

This detailed analysis of the judgment showcases the Tribunal's thorough consideration of the legal provisions, factual circumstances, and precedents to arrive at a well-reasoned decision in favor of the appellant.