2017 (7) TMI 299 - AT - Service Tax

Technical Inspection and Circulation Service - The dispute in the present case relates to service tax liability of the appellant in respect of consideration received under the heading Quality Inspection Charges collected by the Ordinance Factory, Kamaria, which were credited to the appellants accounts - Held that - there can be no service tax liability on the charges collected by the appellant. Hence, there is no question of interest payable by them - appeal allowed - decided in favor of appellant.

Summary

Issues:
Service tax liability on quality inspection charges collected by the appellant and the dispute regarding payment of interest for delay in discharging the service tax.

Analysis:
The appeal was against an order related to the service tax liability of the appellant concerning quality inspection charges collected by the Ordinance Factory. The appellant, part of DGQA, Ministry of Defence, is responsible for quality checks of defense stores and ammunition. The Revenue claimed the appellant was liable to service tax under 'Technical Inspection and Circulation Service.' The appellant argued that their activities were in public interest, mandatory, and not liable to service tax as per a Board circular. They referred to a decision by the Jammu & Kashmir High Court regarding service tax on testing fees for firearms.

The Tribunal noted the Jammu & Kashmir High Court's decision that testing fees for firearms were not subject to service tax as they were statutory requirements for public safety. The Court emphasized that activities performed by sovereign/public authorities under the law are not taxable services. Referring to Circulars and previous orders, the Tribunal concluded that the appellant's work was in public interest and statutory, exempting them from service tax liability. Therefore, the Tribunal set aside the impugned order and allowed the appeal, stating there was no service tax liability on the charges collected by the appellant, hence no interest was payable.

In conclusion, the Tribunal relied on the Jammu & Kashmir High Court's decision and various Circulars to determine that the appellant's activities were statutory and in public interest, exempting them from service tax liability. The Tribunal found no basis for interest payment and allowed the appeal, setting aside the previous order.