2015 (12) TMI 1108 - AT - Service Tax

Classification of service - Radiographic testing services or photographic services - Held that - The period involved in this case is 16.07.2001 to 17.06.2003. In perusal of OIO and OIA, we find that the nature of service has been explained by the adjudicating authority elaborately. We find that the appellants are not rendering any photographic services but carrying out radiographic testing on industrial castings so as to identify any defects on the castings by using X-ray film through Radiography testing. On perusal of the film, we find that the x-ray strip of castings No. ABG2927 L4-L5 shows defects (cavity). It is very clear that the appellants are rendered radiographic testing of castings by using the x-ray films, which is commonly employed by any metallurgical industry and automobile industry, where high precision moulds and castings is of auto components are x-ray tested for quality so as to avoid risk and damage of automobiles. Lower appellate authority in his findings held that the Board s Circular is not applicable to the present case on the ground that the said clarification is only applicable to medical field. However, we find that there is no such mention in the Board s Circular that it is applicable only in the medical field. Further we find that the new service Testing and Technical service was specifically introduced under Section 65(105)zzi of the Finance Act. The radiographic testing services rendered by the appellants does not fall under the category of photographic services during the relevant period - Decided in favour of assessee.

Summary

Issues involved:
Classification of service under photographic services, Limitation of second show cause notice (SCN), Applicability of Board's Circular on radiographic testing services.

Classification of service under photographic services:
The case involved appeals by the appellant assessee and the Revenue regarding the demand of service tax under "Photographic Services (Radiographic Services)" for providing radiographic testing services. The Commissioner (Appeals) upheld the demand but reduced the penalty. The appellant argued they were not providing photographic services but conducting radiographic testing on industrial castings. They highlighted the introduction of a new service "Technical Inspection and Certification" from 01.07.2003, under which they registered and paid service tax. The Tribunal found that the appellants' service did not fall under photographic services as clarified by the Board's Circular, which stated that x-ray and CT scan services do not come under taxable services. The Tribunal also noted that the radiographic testing services were more aligned with the new service introduced. Consequently, the demand was set aside, and no penalty was imposed.

Limitation of second SCN:
The appellant argued that the second SCN issued was time-barred as it was issued after the extended period following the first SCN. The Tribunal agreed that the second SCN should have been issued before 30.06.2004, considering the facts known to the department. As a result, the second SCN was deemed hit by limitation.

Applicability of Board's Circular on radiographic testing services:
The Board's Circular clarified that x-ray and CT scan services do not fall under taxable services, particularly mentioning that they are not photography studios or agencies. The Tribunal found that the lower appellate authority incorrectly applied this clarification only to the medical field, whereas the Circular did not specify such limitations. The Tribunal noted that the radiographic testing services provided by the appellants were not photographic services and aligned more with the new "Testing and Technical service" introduced. Therefore, the demand was set aside based on the Board's Circular and the nature of the services provided by the appellants, leading to the rejection of the Revenue's appeal against the reduction in penalty.