2008 (10) TMI 116 - AT - Service Tax

Maintenance & Repair service - Retreading of old tyres - re-sale sale tax paid for the vulcanizing solution & tread rubber used for rebuilding tyres - appellants are eligible for exemption u/not. 12/03-S.T. if documentary proof on sale of material is produced - assessee is eligible for abatement equal to resale value of the material used in retreading tyres and on which it paid sales tax abatement allowed subject to furnishing of evidence for having sold the inputs used in retreading tyres

Summary

Issues:
Waiver of pre-deposit and stay of recovery of dues adjudged against M/s. Abirami Retreading Company in the impugned order.

Analysis:
In the present case, M/s. Abirami Retreading Company filed two applications seeking waiver of pre-deposit and stay of recovery of dues determined against them in the impugned order. The original authority had demanded an amount of Rs. 97,851/- as Service tax along with penalties under various sections of the Finance Act, 1994. The demand was related to the 'maintenance and repair' service provided by the appellants during a specific period. The appellants had not registered themselves under the relevant category with the department. The lower authorities did not accept the claim for abatement made by the appellants due to lack of documentary evidence. The appellants argued that they were eligible for abatement under a specific notification and had documentary proof to support their claim. The case revolved around the appellants' eligibility for exemption and the quantification of their tax liability.

Moving forward, the Tribunal considered the submissions of both parties. It was acknowledged that the appellants were indeed eligible for exemption under the relevant notification if they could provide documentary evidence of selling materials to their clients during the service provision. The appellants had paid sales tax on the materials used for retreading tires and were entitled to abatement from the taxable value. The Tribunal directed the original authority to allow the benefit of the notification upon the appellants furnishing evidence of material sales and to re-quantify the taxable value considering the total proceeds inclusive of the service tax to be paid. Consequently, the impugned orders were set aside, and the matters were remanded to the original authority for a fresh decision on the appellants' liability for service tax and penalties. The appellants were granted an opportunity for a fresh hearing before a new decision was reached.

In conclusion, the Tribunal allowed the appeals by way of remand, ensuring that the appellants would have a fair chance to present their case anew before the original authority. The stay applications were also disposed of in light of the remand order, providing clarity on the further proceedings in the case.