2013 (4) TMI 458 - AT - Service Tax

Levy of service tax/interest/penalty taxable service of maintenance and repair; that it failed to remit service tax pursuant to which service tax, interest and penalty is leviable assessee contended that repair or service carried out under a contract other than a maintenance contract or agreement was not covered within the purview of service tax. Held that - In the case on hand, the respondent-assessee is admittedly provide repairing service to several firms and had received payments for the repairing services provided. The assessee thus clearly falls within the second limb of the expression maintenance or repair as defined in Section 65 (64) of the Act and must be deemed to have rendered the taxable service under Section 65(105)(zzg). Since we are now of the considered view that the appellate order is fallacious and unsustainable, this would result in restoration of the adjudication order. However we are of the view that in the totality of the facts and circumstances already referred to, imposition of penalty u/s 76 & 78 is unjustified and in view of provisions of Section 80 no penalty u/s 76 or 78 ought to be imposed. Thus the order in Appeal is quashed and the adjudication order is restored but modified to the extent. Appeal is allowed

Issues:
- Interpretation of provisions of Section 65(64) and Section 65(105)(zzg) of the Finance Act, 1994 regarding liability to service tax on maintenance or repair services provided by a manufacturer.
- Applicability of service tax on repair services provided under a rate contract.
- Analysis of earlier judgments by the Tribunal and the relevance of Board Circular dated 27.7.2005 in determining service tax liability.
- Consideration of the extended period of limitation under the proviso to Section 73(1) of the Act.
- Imposition of penalty under Sections 76 and 78 of the Act.

Detailed Analysis:

1. Interpretation of Provisions of the Act:
- The appeal involved a dispute over the liability to service tax on maintenance or repair services provided by a manufacturer. The Tribunal analyzed Section 65(64) and Section 65(105)(zzg) of the Finance Act, 1994 to determine the applicability of service tax on repair services.

2. Applicability of Service Tax on Repair Services:
- The Tribunal considered whether repair services provided under a rate contract were liable to service tax. It examined the definition of maintenance or repair services under the Act and the specific circumstances of the case to ascertain the tax liability on repair charges.

3. Analysis of Earlier Judgments and Board Circular:
- The Tribunal reviewed earlier judgments by the Tribunal and the relevance of the Board Circular dated 27.7.2005 in interpreting the service tax liability. It assessed the consistency of these judgments with the statutory provisions and the impact of the Circular on determining the tax liability.

4. Extended Period of Limitation:
- The Tribunal deliberated on the invocation of the extended period of limitation under the proviso to Section 73(1) of the Act. It assessed the justification and validity of invoking the extended period in the context of the case.

5. Imposition of Penalty:
- The Tribunal addressed the imposition of penalty under Sections 76 and 78 of the Act. It considered the circumstances under which the penalty was imposed, the validity of such imposition, and the applicability of Section 80 in determining the imposition of penalties.

This comprehensive analysis of the issues involved in the judgment highlights the Tribunal's detailed examination of the legal provisions, precedents, and relevant factors in determining the service tax liability, applicability of penalties, and the impact of earlier judgments and circulars on the case.

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