2009 (9) TMI 113 - AT - Service Tax

Non-speaking order - appellant on behalf of Eureka Forbes was rendering repair services - But the Department has alleged against the appellant that it had provided two categories of services, one is maintenance and repair and other is business auxiliary services demand denying beneit of small scale service provider exemption under Notification No. 6/2005-C.E., dated 1-3-2005 - Finding that the appellant is a small scale service provider and also acted on behalf of the Eureka Forbes Ltd., the order of adjudication has not brought out the manner how the appellant being after-sales provider should be made liable to tax while the terms of agreement appears to be a case of franchise agreement. No speaking order in respect of the business auxiliary services provided as alleged in SCN - appellant is a small scale service provider and the scope of service is different as that was alleged by show cause notice Assessee s appeal is allowed

Summary

Issues:
1. Service tax demand against the appellant for after-sales services.
2. Claim of benefit of Notification No. 6/2005.
3. Allegation of providing maintenance, repair, and business auxiliary services.
4. Interpretation of the agreement between the appellant and Eureka Forbes.
5. Treatment of the appellant as a small service provider.
6. Consideration of non-speaking order regarding business auxiliary service.
7. Decision on pre-deposit and appeal disposal.

Analysis:
1. The appellant, a service provider for Eureka Forbes, faced a service tax demand of Rs. 29,163. The appellant claimed the benefit of Notification No. 6/2005, dated 1-3-2005. The appellant argued that they provided repair services only, not maintenance or business auxiliary services. The show cause notice did not specify the repair activity under the agreement, stating that the appellant acted as an agent of Eureka Forbes for after-sales service. The appellant, being a small service provider, contended that they were entitled to the benefit of the notification. The absence of a speaking order on the alleged business auxiliary service meant the appellant should not be brought under the service tax net.

2. The Department supported the order passed by the learned Commissioner (Appeals). However, the Tribunal found that the appellant, being a small-scale service provider and acting on behalf of Eureka Forbes, was not clearly made liable for tax. The terms of the agreement resembled a franchise agreement. The Tribunal also noted the lack of a speaking order regarding the business auxiliary service. After examining the appellant's status and the service scope evident from the agreement, the Tribunal waived the pre-deposit and allowed the appeal in favor of the assessee.

3. The Tribunal concluded that the appellant, a small-scale service provider for Eureka Forbes, was not appropriately made liable for tax based on the agreement's terms and the nature of services provided. The Tribunal dispensed with the pre-deposit requirement and disposed of the stay application and appeal in favor of the assessee. The decision was made after considering the appellant's status and the absence of a clear mention of business auxiliary services in the show cause notice.

This detailed analysis highlights the key arguments, considerations, and conclusions drawn by the Tribunal in addressing the issues raised in the legal judgment.