2010 (4) TMI 122 - AT - Service Tax

Repair and Maintenance Service versus technical inspection and certification service appellants submitted that the activity carried out by the appellants was neither maintenance nor repair meant for public but statutory obligation discharged under the Explosive Act 1884. The testing and inspection is statutory one discharged on behalf of the Indian Oil Corporation in terms of work order dated 28.11.2001. In the absence of maintenance or repair the service cannot be called so. Held that . No evidence was brought to our notice by Revenue to appreciate basis of levy of service tax of Rs. 5, 17, 673/- under the category of Maintenance and Repair . Service tax is not leviable decided in favor of assessee

Summary

Issues:
1. Whether the activity carried out by the appellants constitutes 'Repair & Maintenance' service or a statutory obligation of technical inspection and certification service.

Detailed Analysis:
The judgment by the Appellate Tribunal CESTAT, New Delhi, addressed the dispute regarding the nature of the activity conducted by the appellants. The core issue revolved around determining whether the service provided should be categorized as 'Repair & Maintenance' or as a statutory obligation involving technical inspection and certification service. The appellants were engaged in periodically testing cylinders under the Gas Cylinder Rules, 2004, framed under the Indian Explosive Act, 1884. The Revenue authority classified this service as maintenance and repair, leading to the dispute at hand.

The counsel representing the appellants argued that the activity undertaken was not maintenance or repair intended for the public but rather a statutory obligation fulfilled under the Explosive Act, 1884. It was highlighted that the testing and inspection were statutory requirements carried out on behalf of the Indian Oil Corporation as per a work order dated 28.11.2001. The absence of commercial maintenance or repair activities led to the contention that the service could not be labeled as such.

On the other hand, the Revenue contended that the lower authorities had correctly analyzed the work order from the Indian Oil Corporation, Bhopal, supporting the classification of the service as maintenance and repair. However, upon hearing both sides and examining the records, the Tribunal found no evidence presented by the Revenue to justify the imposition of service tax under the category of 'Maintenance and Repair.' The appellate authority had granted Small Scale exemption benefit subject to verification, but no substantial proof existed to demonstrate commercial repair and maintenance activities by the appellants for all. The records indicated that the appellants were specifically engaged by the Indian Oil Corporation to conduct periodic testing and upkeep of cylinders in compliance with the Explosive Act, 1884.

In the absence of concrete evidence supporting the Revenue's classification and the lack of indication of commercial repair and maintenance activities beyond statutory obligations, the Tribunal set aside the orders of the lower authorities and allowed the appeal. The judgment, delivered by Hon'ble Dr. C. Satapathy, Member (Technical), and Hon'ble Mr. D.N. Panda, Member (Judicial), emphasized the importance of factual substantiation in determining the nature of services provided and upheld the appellants' position based on the evidence presented in the case.

This detailed analysis encapsulates the key arguments, considerations, and conclusions drawn by the Appellate Tribunal CESTAT, New Delhi, in resolving the dispute over the classification of the appellants' activities as either 'Repair & Maintenance' service or a statutory obligation of technical inspection and certification service.