2018 (6) TMI 483 - AT - Service Tax

Classification of services - Business of refining of crude and marketing of various petroleum products - whether taxable under the head Technical Inspection and Certification Service or otherwise? - Held that - The taxability will depend on the conditions that such services are provided by an agency; such agency should involve in inspection or examination and on completion of such inspection or examination; a certificate is issued stating to meet any of the criteria like quality maintenance of standards functionality or utility safety or any other characteristics. The appellants though are performing certain activities in relation to the maintenance and safety of the tank trucks and are issuing a certificate to the effect that the tanks are purged/degased the same cannot be considered to be a service within the scope of Technical Inspection and Certification Service - The appellants are not basically an agency involved with the testing and certification. In fact it is abundantly clear that they are performing certain activities which make the truck tanks fit to be filled with LPG for further transportation. This is to be construed only as an activity related to the safety and maintenance of the tank truck. M/s. HPCL have not fulfilled the conditions so as to impart the activity of purging and degassing tank trucks as Technical Inspection and Certification Service - appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of activity under "Technical Inspection and Certification Service"; Bar of limitation for demand of service tax.

Analysis:
1. Classification of activity under "Technical Inspection and Certification Service":
The case involved M/s. Hindustan Petroleum Corporation Limited engaging in degassing and purging activities for LPG tank trucks. The department argued that these activities fell under "Technical Inspection and Certification Service." A show-cause notice was issued, and subsequent orders demanded service tax, interest, and penalty. The appellant contended that their activities did not meet the criteria for such classification. They argued that degassing and purging were standalone activities necessary for safety and maintenance, not inspection or certification services. The appellant cited relevant legal provisions and case laws to support their argument. The Tribunal examined the nature of the activities, emphasizing that the appellant was not primarily an agency for testing and certification. The Tribunal concluded that the activities were related to safety and maintenance, not technical inspection and certification. As a result, the appeal was allowed, and the demand was set aside.

2. Bar of limitation for demand of service tax:
The appellant also raised the issue of the demand for the period from 1.7.2003 to 31.3.2005 being barred by limitation. They argued that since the department was aware of their activities, the extended period for demand could not be invoked. As the Tribunal found in favor of the appellant on the classification issue, it did not delve into the limitation aspect. However, the appellant's argument on limitation would have been crucial if the demand had been upheld. The Tribunal's decision on the classification rendered the limitation issue moot.

In conclusion, the Tribunal's judgment clarified the distinction between degassing and purging activities for safety and maintenance purposes and technical inspection and certification services. The appellant's activities were deemed not to fall under the latter category. The issue of limitation did not need to be addressed due to the Tribunal's ruling on the classification matter.