2012 (10) TMI 520 - AT - Service Tax

Erection, Installation and Commissioning Service - appellants are clearing the solar system through dealers also and the dealers further sell it to the customers and charge certain amount for installation Held that - Activity of installation of solar system falls under the category of Erection, Installation and Commissioning Service Quantification of service component Held that - Matters remanded back to the original adjudicating authority to consider the records, documents for computation of service components in the activity of the appellants and pass appropriate orders in accordance with law

Summary

Issues:
Quantification of service component for installation of solar water heater system and liability to pay service tax.

Analysis:
The appellants, manufacturers of solar water heater systems, were selling and installing them without charging a separate amount for installation. The department contended that the installation activity falls under 'Installation, Erection and Commissioning Service,' necessitating service tax payment. Show cause notices were issued, leading to demands confirmed by the adjudicating authority. The appellants argued that as manufacturers of solar systems exempt from excise duty, they were not liable for service tax on the installation activity. They provided cost data to support their claim, which the adjudicating authority did not consider. The Tribunal noted that while the appellants did not charge separately for installation, they were still liable for service tax on the activity. The issue was the quantification of the service component, which the appellants had provided data for but was not considered. The Tribunal decided to remand the matter back to the adjudicating authority for proper examination and quantification of the service component, similar to a previous case involving a different party.

The Tribunal considered both parties' submissions and records, concluding that the appellants, despite not charging separate installation fees, were liable for service tax on the installation activity. The Tribunal emphasized the need to determine the service component accurately based on the data provided by the appellants. Citing a previous case with a similar issue, the Tribunal decided to remand the matter to the adjudicating authority for a thorough examination and proper quantification of the service component. Consequently, the appeals and stay applications were disposed of by remanding the matters back to the original adjudicating authority for further consideration and appropriate orders in accordance with the law.