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2024 (8) TMI 15 - AT - Service TaxClassification of services - Management, Maintenance or Repair Services or not - exclusive use of their plant with all manpower along with common infrastructure facilities - period from April-2015 to June-2017 - HELD THAT - The issue decided in the case of GUJARAT INSECTICIDES LTD VERSUS C.C. E-BHARUCH 2024 (1) TMI 774 - CESTAT AHMEDABAD where it was held that 'under the arrangement between the appellant and M/s. Gharda Chemicals Ltd. there is no provision of service of management, maintenance or repair service, whereas, the activity of the appellant is of production of excisable goods.' It is clear that on the similar facts, the matter stands covered in favour of the appellant in their own matters, both prior to Negative List Period as well as Post Negative List Period. The agreement re-entered in 2015 in also not substantively different from earlier agreements covered by aforesaid orders. Accordingly, the matter being no longer res Integra and having been decided in favour of party and the concerned services not having been found to be the management, maintenance or repair services but production of excisable goods, the demand in view of the stated decisions is not sustainable. Appeal allowed.
Issues Involved:
1. Classification of services provided by the assessee. 2. Liability for service tax under "Management, Maintenance or Repair Services." 3. Applicability of exemptions under Business Auxiliary Services. 4. Validity of the Show Cause Notice and subsequent demands. Issue-wise Detailed Analysis: 1. Classification of Services Provided by the Assessee: The core issue was whether the services provided by the assessee to M/s. GCL fell under "Management, Maintenance or Repair Services" as defined under Section 65(64) of the Finance Act, 1994. The assessee argued that their activities were essentially job-work under the provisions of Rule 4(5)(a) of the CENVAT Credit Rules, 2004, involving the production of excisable goods using inputs and packaging materials supplied by M/s. GCL. The assessee contended that they were engaged in the production and clearance of finished excisable goods and not in providing management, maintenance, or repair services. 2. Liability for Service Tax Under "Management, Maintenance or Repair Services": The department alleged that the assessee provided taxable services to M/s. GCL by allowing the exclusive use of their plant and modifying it to suit M/s. GCL's requirements. The department issued a Show Cause Notice demanding service tax of Rs. 3,30,64,254/- for the period from April 2015 to June 2017, along with applicable interest and penalties. The assessee countered this by stating that the entire activity was job-work, which did not fall under the purview of "Management, Maintenance or Repair Services." 3. Applicability of Exemptions Under Business Auxiliary Services: The assessee further argued that even if their activities were considered under Business Auxiliary Services, they would be exempt from service tax. They cited Notification No. 8/2005-ST, which exempts job-work charges if the processed goods are returned to the principal and the principal clears the final products on payment of central excise duty. The assessee maintained that their activities resulted in the manufacture of new commodities, thus excluding them from service tax liability under Section 65(19) of the Finance Act, 1994. 4. Validity of the Show Cause Notice and Subsequent Demands: The assessee challenged the validity of the Show Cause Notice and the subsequent demands, arguing that their activities did not constitute "Management, Maintenance or Repair Services." They cited previous decisions from the CESTAT, Ahmedabad, which had ruled in their favor on similar facts. The tribunal noted that the agreement entered into in 2015 was not substantively different from earlier agreements that had been adjudicated favorably for the assessee. Judgment: The tribunal reviewed the records and previous decisions, noting that similar issues had been resolved in favor of the assessee in their own matters. It concluded that the services provided did not fall under "Management, Maintenance or Repair Services" but were related to the production of excisable goods. Consequently, the demand for service tax was deemed unsustainable. Conclusion: The appeal was allowed with consequential relief, and the tribunal pronounced the judgment in the open court on 29.07.2024. (Pronounced in the open court on 29.07.2024)
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