2012 (10) TMI 66 - AT - Service Tax

Waiver of pre-deposit demand is under the head Maintenance or Repair Service - repairs undertaken by the appellant were in relation to the sale of machines Held that - explanation which was introduced with effect from 16-6-2005 is clarificatory and retrospective so as to cover the period of dispute - appellant s services squarely fall within the ambit of the definition of Business Auxiliary Service - during the period of dispute, they were entitled to exemption - demand under a different head is not sustainable - waiver of pre-deposit allowed

Summary

Issues:
1. Applicability of service tax and education cess for the period from 1-7-2003 to 8-7-2004.
2. Claim of exemption under Notification No. 13/2003-S.T. for 'Business Auxiliary Service'.
3. Interpretation of the 'Explanation' to the definition of 'Business Auxiliary Service' under Section 65(19) of the Finance Act, 1994.
4. Prima facie case for the appellant based on the 'Explanation' introduced with effect from 16-6-2005.

Analysis:
1. The appellant sought waiver and stay regarding the demand for service tax and education cess for the period from 1-7-2003 to 8-7-2004, along with penalties imposed. The impugned demand was under the head of 'Maintenance or Repair Service'. The appellant was a commission agent undertaking repairs of machines sold by a company during the warranty period. They claimed exemption under Notification No. 13/2003-S.T. for 'Business Auxiliary Service' during the disputed period. The department sought to levy service tax under a different head due to the exemption. However, the appellant argued that the retrospective 'Explanation' to the definition of 'Business Auxiliary Service' covered their activities during the dispute period, making the demand unsustainable.

2. The Addl. Commissioner reiterated that the appellant provided 'Repair or Maintenance Service' during the disputed period based on the Agreement with the company. He highlighted specific Articles in the Agreement to support this claim. However, the appellant's counsel relied on the retrospective 'Explanation' to argue that their services fell within the definition of 'Business Auxiliary Service' even during the disputed period, warranting exemption under the relevant notification.

3. The Tribunal considered the 'Explanation' introduced with effect from 16-6-2005, which clarified the definition of 'commission agent' to include activities related to the sale of goods or services. The repairs undertaken by the appellant were deemed to be in relation to the sale of machines by the company, bringing their services under the ambit of 'Business Auxiliary Service'. Since the appellant was entitled to exemption during the disputed period and had subsequently registered under 'Business Auxiliary Service', the demand under a different head was deemed unsustainable, leading to a waiver of pre-deposit and stay of recovery for the adjudged dues.

This detailed analysis of the judgment addresses the issues raised by the appellant regarding the applicability of service tax, claim of exemption, interpretation of legal provisions, and the Tribunal's decision based on the retrospective 'Explanation' provided in the Finance Act, 1994.