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2018 (1) TMI 1056 - AT - Service TaxDemand of Service Tax, interest and imposition of penalties under Sections 76, 77 & 78 of the Finance Act, 1994 - erection, commissioning and installation services - benefit of N/N. 1/2006 - Held that - reliance placed in the case of COMMR. OF SERVICE TAX, BANGALORE Versus LINCOLN HELIOS (INDIA) LTD. 2011 (4) TMI 586 - KARNATAKA HIGH COURT , where it was held that it cannot be said that there is any willful attempt to evade the payment of tax on the part of the assessee. It is in the nature of transitional period and the benefit of doubt that existed in the mind of the assessee is to be given to him - the appellants are liable to pay service tax on the service aspect of the transaction. Extended period of limitation - Held that - A perusal of the impugned order says that it indeed does not deal with the issue of limitation raised by the appellant and consequently it fails to deal with the imposition of penalties specifically - the impugned order is not a speaking order. The matter is remanded to the Commissioner (Appeals) to decide afresh - appeal allowed by way of remand.
Issues:
Appeal against demand of Service Tax, interest, and penalties under Sections 76, 77 & 78 of the Finance Act, 1994 related to installation of imported capital goods and taxability of services provided. Analysis: 1. The appellant, engaged in various services, argued against the demand of Service Tax, interest, and penalties on the installation of imported capital goods. The Revenue issued a show-cause notice demanding service tax on the free service of erection, commissioning, and installation provided by the supplier. The appellant contended that the entire value of goods imported was already taxed as import of goods, and thus, should not be taxed again as a service. They highlighted the distinction between the sale of equipment and charges for erection, commissioning, and installation, citing relevant case laws to support their argument. 2. The Revenue sought to consider the entire amount paid to the supplier to arrive at the value of services provided, applying abatement as per Notification No. 1/2006. The appellant argued that the supplier did not charge anything for the installation of goods during the free service period, indicating no service element. The appellant further contended that the value of service should be calculated on a daily basis, considering the charges for each day of work done by the supplier. 3. The Tribunal reviewed the submissions and noted that similar matters were previously decided in cases like Lincon Helios and Alidhara Texspin. The decision of the Tribunal in the case of Lincon Helios was approved by the High Court of Karnataka. The Tribunal observed that the issue before the High Court was related to waiver of penalties, but the Court also provided insights on the taxability aspect. The Tribunal concluded that the appellants are liable to pay service tax on the service aspect of the transaction, emphasizing the distinction between excise duty on goods and service tax on services rendered. 4. The Tribunal found merit in the appellant's argument to value the service on a daily basis and remanded the matter to the Commissioner (Appeals) for a fresh decision. The Tribunal also noted that the impugned order did not address the issue of limitation raised by the appellant, indicating that the order was not a speaking order. Consequently, the Tribunal set aside the impugned order and allowed the appeal by way of remand for further consideration. This detailed analysis of the legal judgment provides insights into the arguments presented, the relevant case laws cited, and the Tribunal's decision on the taxability of services related to the installation of imported capital goods.
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