2019 (3) TMI 766 - AT - Service Tax

Repair and maintenance services - repairs are usually carried out at the factory of the Appellant - demand of service tax with interest and penalty - Held that - The Appellants are discharging the duty of Central excise on the spares/ parts used in repair and refurbishing on going through sample invoices it appears that the contention of the Appellant is correct. Though the service is rendered no remuneration for such repair and maintenance service is charged/ received by the Appellants. In the absence of consideration for the service rendered it cannot be argued that the Appellants are liable to pay service tax on such services provided by them. In the absence of any consideration service tax cannot be charged obviously service tax cannot be charged on the value of the spare parts used for such repair or maintenance. It is not the department s case that the Appellants have not discharged applicable Central Excise duty on the spare parts used by the Appellant in discharge of the service. The department has not produced any evidence to the effect that the Appellants have received remuneration for such repair or maintenance service in the absence of the same no service tax is payable by the Appellants in the result no demands survive - appeal allowed - decided in favor of appellant.

Summary

Issues:
Service tax liability on repair and maintenance services provided free of cost by the appellant.

Analysis:
The appellant, engaged in manufacturing machinery and providing repair services, was issued show cause notices demanding service tax, interest, and penalty. The lower authorities upheld the demands, leading to the appeals. The appellant argued that repair services were provided free of cost, with only excise duty paid on replaced parts. They contended that service tax is leviable only when a service is rendered for consideration. The appellant cited relevant case laws to support their argument.

The Authorized Representative relied on a different case to support the findings of the lower authorities. After hearing both sides and examining the records, the tribunal noted that the appellant received goods for repair from customers under warranty/guarantee schemes or on a chargeable basis. The tribunal observed that the appellant discharged central excise duty on spare parts used in repairs, even though no remuneration was charged for the repair services. The tribunal emphasized that service tax liability arises when there is consideration for the service provided, involving a service, provider, recipient, and consideration. In this case, as no consideration was received for the repair services, the tribunal concluded that service tax was not applicable.

The tribunal found that the department failed to provide evidence that the appellant received remuneration for the repair services, leading to the decision that no service tax liability existed. The tribunal relied on the case laws cited by the appellant and set aside the impugned orders, providing consequential relief. The judgment was pronounced on 11/03/2019 by the tribunal members Shri S K Mohanty and Shri P. Anjani Kumar.