2014 (11) TMI 210 - AT - Service Tax

Technical Inspection and Certification service - appellants engaged in manufacture of body building of buses, trucks etc., also undertake repair maintenance and servicing of commercial vehicles - AGPL after conducting inspection and taking rectificatory action as recorded in the vehicle data sheets send the vehicles back to TML for export - whether the service provide by AGPL is Technical Inspection and Certification Agency Service - Held that - On receiving this work order AGPL undertakes the jobs as indicated in the vehicle data sheet. The data sheets give details of defects and rectificatory action under various Heads, namely Leakages, Electricals, Mechanicals, Body, Paint, Body Fitments. The rectification job of these defects certainly seem to be activities conducted by any vehicle repair shop. If the argument of Revenue is accepted, every motor garage will become a technical inspection and certification agency. This would lead to a ridiculous situation. Revenue appears to have misread the meaning of technical inspection and certification. We note that the definition conveys the purpose of certification alongwith inspection to meet specified standards. The job card or vehicle data sheets clearly indicate that AGPL are merely rectifying/replacing some damaged/defective parts etc. By no stretch of imagination can this activity be termed as technical inspection and certification. We therefore set aside the order-in-original confirming the demand of duty on the activities undertaken by the appellant. Whether a service would amount to renting of immoveable property or to storage and warehousing service - Held that - facts are clearly in favour of AGPL. AGPL has merely rented space out to TML. Although they arranged for security, the expenses on this account are met by TML. The Ld. A.R. stated that it is not clear from records whether the management and safekeeping of the vehicles is done by AGPL. On the contrary, we find that there is a clear finding of the Commissioner that handling, management and safekeeping of the vehicles is the responsibility of TML. Even the security is paid for by TML and so are the telephone expenses and diesel expenses. We find that none of the ingredients which are essential part of warehousing and storage service are fulfilled so as to cover the activity of AGPL under this service - Decided in favour of assessee.

Summary

Issues:
1. Appellant aggrieved with demand of service tax under technical inspection and certification service.
2. Revenue aggrieved with dropping of demand of service tax under storage and warehousing service.

Analysis:
1. The first issue pertains to the demand of service tax on the activities of the appellant under technical inspection and certification service. The appellant, engaged in manufacturing and servicing commercial vehicles, contended that their activities did not fall under this category. They argued that the vehicles were inspected for mechanical and electrical parts, body fitments, paints, etc., which did not constitute technical inspection and certification as defined. The Tribunal noted that the activities undertaken by the appellant were akin to those of a repair workshop and did not meet the standards for technical inspection and certification. The definition of technical inspection and certification required certification to ensure goods meet specified standards, which was not the case here. The Tribunal ruled in favor of the appellant, setting aside the demand of duty imposed by the Commissioner.

2. The second issue involved the demand of service tax under storage and warehousing service for the activity of renting out space to park vehicles. The Revenue argued that this activity should be classified as storage and warehousing service based on a Board Circular. However, the Tribunal found in favor of the appellant, noting that the responsibility for handling, management, and safekeeping of the vehicles rested with the entity renting the space, not the appellant. The Tribunal observed that the essential elements of warehousing and storage service were not fulfilled by the appellant, as confirmed by the Commissioner's findings. Consequently, the Tribunal rejected the Revenue's appeal and allowed the appeal of the appellant, granting consequential relief.

In conclusion, the Tribunal ruled in favor of the appellant on both issues, setting aside the demand of service tax under technical inspection and certification service and rejecting the demand under storage and warehousing service. The judgment provided a detailed analysis of the activities undertaken by the appellant and the legal definitions applicable to the classification of services, ultimately leading to the decisions rendered by the Tribunal.