2009 (5) TMI 152 - AT - Service Tax

It is the contention of the applicants that in regard to the services rendered to the Government agencies, the same are testing and certification services, which have been rendered in relation to pollution or various chemical contamination of water and the service in relation to inspection and certification of pollution levels is excluded from the category of Technical inspection and Certification service. Hence, they are not liable to pay any service tax. - The issue involved in the instant case is whether the services rendered by the applicants are covered under the category Technical testing and Analysis services as held by the Department or under Technical inspection and Certification services as contended by the applicants. - it appears that the services rendered by the applicants are prima facie covered under the category Technical testing and Analysis service. Pre-deposit partly waived

Summary

Issues:
1. Noncompliance with Section 35F of the Central Excise Act, 1944 in a stay petition.
2. Classification of services as 'Technical testing and Analysis' or 'Technical inspection and Certification'.
3. Liability to pay service tax on services rendered to Government agencies for water testing.

Analysis:
1. The judgment deals with a stay petition filed by M/s. Radiant Laboratories against an order passed by the Commissioner (Appeals) rejecting their appeal for noncompliance with Section 35F of the Central Excise Act, 1944. The applicants were directed to pay the service tax demand of Rs. 6,64,040/- along with interest and penalties imposed under various sections of the Finance Act, 1994.

2. The main issue in the case pertains to the classification of services provided by the applicants. The dispute revolves around whether the services rendered fall under 'Technical testing and Analysis' as determined by the Department or under 'Technical inspection and Certification' as claimed by the applicants. The period in question is from 2003-2004 to 2005-06. The services involved testing and analysis, including water testing for microbes and bacteria, for both private parties and Government agencies. The contention was that services to Government agencies related to pollution levels and chemical contamination of water, which should be excluded from the category of 'Technical inspection and Certification' services to avoid service tax liability.

3. Upon examination, the Tribunal found that the services provided by the applicants prima facie fall under the category of 'Technical testing and Analysis' services. However, a detailed examination of the matter was deemed necessary. Considering the financial hardship claimed by the applicants, the Tribunal directed them to pre-deposit a sum of Rs. 1,00,000/- towards service tax within eight weeks. Upon compliance, the pre-deposit of the remaining amount was waived, and recovery stayed pending the appeal's disposal. Failure to comply would lead to the vacation of stay and dismissal of the appeal without further notice.

This judgment highlights the importance of complying with statutory provisions, the need for precise classification of services for tax purposes, and the Tribunal's discretion in granting stays based on the circumstances of the case.