2015 (12) TMI 81 - AT - Service Tax

Valuation - Service of Maintenance or repair - non-inclusion of cost of various material - Held that - Demand stands raised from the period 16.06.05 to 31.03.07 by way of issue of Show Cause Notice dt.01.02.08. Though the Commissioner has held against respondent on the point of limitation but they have filed Cross Objection Application which have to be treated as appeal. It is further noticed that during the relevant period there were various decisions in favour of the assessee. The issue of limitation stands decided by the tribunal in the number of decisions. It was held that when there are contra views on a particular issue, assessee cannot be attributed with a malafide intention and longer period of limitation would not be available. - part of the demand would fall within the limitation period for which the matter is being remanded for quantification of the demand. As we already held that there was no suppression on the part of the respondent, no penalty would be imposable upon them - Appeal disposed of.

Summary

Issues involved:
1. Inclusion of cost of materials for maintenance or repair services.
2. Limitation period for raising demand.
3. Applicability of penalty on the respondent.

Analysis:

Issue 1: Inclusion of cost of materials for maintenance or repair services
The appeal pertains to a dispute over the inclusion of the cost of various materials used for providing maintenance or repair services, specifically reconditioning conveyor belts. The Revenue contended that materials like chemicals should be included in the value of the services. The Tribunal noted that a Larger Bench had previously decided in favor of the Revenue in a similar case, citing the case of Aggarwal Colour Advance Photo System Vs. CCE, Bhopal. Consequently, the Tribunal agreed with the Revenue on the merit of the case, ruling in their favor.

Issue 2: Limitation period for raising demand
The demand in question was raised for the period from 16.06.05 to 31.03.07 through a Show Cause Notice issued on 01.02.08. Although the Commissioner had ruled against the respondent on the issue of limitation, the respondent filed a Cross Objection Application, which was treated as an appeal. The Tribunal observed that during the relevant period, there were conflicting decisions in favor of the assessee, leading to uncertainty. Citing the case of Shobha Digital Lab. Vs. Commissioner of Central Excise, Bhopal and the Supreme Court case of Continental Foundation Joint Venture Vs. CCE, Chandigarh, the Tribunal held that in situations where there are conflicting views and the matter is referred to a Larger Bench, an extended period of limitation would not be available to the Revenue. Consequently, the Tribunal set aside the impugned order on merits and remanded the matter for quantification of the demand falling within the limitation period.

Issue 3: Applicability of penalty on the respondent
Given the finding that there was no suppression on the part of the respondent, the Tribunal ruled that no penalty would be imposed on them. The appeal was disposed of accordingly, and the Cross Objection filed by the respondent was also disposed of in the same manner.