2017 (10) TMI 749 - AT - Service Tax

Classification of services - Management, Maintenance and Repair Services - Works contract service - period involved is prior to 1.6.2007 - Held that - The period is 16.6.2005 to 31.10.2006 - the property in the goods always vests with the customer who gives the rollers for re-rubberisation and therefore the activity is Works Contract Service - appellant is covered by the judgement of Hon ble Apex Court rendered in the case of Larsen & Toubro Ltd 2015 (8) TMI 749 - SUPREME COURT , where it was held that the period being prior to 1.6.2007, the demand is unsustainable - appeal allowed - decided in favor of appellant.

Summary

Issues: Classification of service for re-rubberizing activity, liability to pay service tax, applicability of notification 12/2003-ST, demand for service tax under Management, Maintenance and Repair Services, suppression of facts, Works Contract Services classification, sustainability of demand pre-1.6.2007.

Analysis:
1. The appellants were involved in re-rubberizing used rollers, and the department classified the activity under 'Management, Maintenance and Repair' services, demanding service tax. The appellants contested this classification, arguing they should be considered under Works Contract Services and be eligible for the benefit of notification 12/2003-ST. The appellants had paid service tax under Business Auxiliary Service but were accused of suppression, leading to the demand for service tax under a different category. The Commissioner (Appeals) determined the activity as Works Contract Service and held the appellants liable for service tax despite sales tax payment. The appellant cited the Larsen & Toubro case to support their argument that the demand was unsustainable pre-1.6.2007.

2. The main contention was the period of the demand, which was prior to 1.6.2007. The Commissioner (Appeals) found the activity to be Works Contract Service based on the ownership of goods and concluded the demand was unsustainable. Citing the Larsen & Toubro case, the tribunal agreed with the appellant's argument, setting aside the impugned order and allowing the appeal with any consequential reliefs.

This judgment clarifies the classification of services for re-rubberizing activities, the liability for service tax, and the applicability of relevant notifications. It emphasizes the importance of correctly categorizing services to determine tax liabilities and highlights the significance of legal precedents in deciding the sustainability of demands, especially concerning the period of applicability.