2019 (4) TMI 1348 - AT - Service Tax

Business Auxiliary Service - appellant entered into contract agreement with M/s. Oil and Natural Gas Corporation Ltd.(ONGCL) for providing cranes on hire basis - HELD THAT - The definition of Business Auxiliary Service under Section 65(19) is clearly applicable only when the service is rendered on behalf of someone else. Perusal of the contract reveals that the activity can at best fall under Section 65(105) (zzzz) w.e.f. 16.05.2008 - Since the entire demand in the present proceedings is for the prior period, there is no justification for the levy of the service tax under the category of Business Auxiliary Service. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Interpretation of the definition of Business Auxiliary Service under Section 65(19) of the Finance Act, 1994.
2. Determination of tax liability for services provided under a contract agreement for hiring cranes.

Issue 1: Interpretation of Business Auxiliary Service Definition
The case involved a dispute regarding the classification of services provided under a contract agreement with M/s. Oil and Natural Gas Corporation Ltd. (ONGC) for providing cranes on hire basis. The Revenue contended that the services fell under the definition of Business Auxiliary Service as per Section 65(19) of the Finance Act, 1994. A show cause notice was issued, and the adjudicating authority confirmed the demand for service tax for the period after the introduction of the relevant sub-section. However, the assessee challenged this classification, arguing that the activities did not qualify as Business Auxiliary Service but rather fell under the category of 'Supply of Tangible Goods Service.' The Tribunal examined the contract and concluded that the services provided did not meet the criteria for Business Auxiliary Service as they were not carried out on behalf of someone else. The Tribunal noted that the contract was solely between the assessee and ONGC, with no involvement of a third party. Consequently, the Tribunal set aside the demand for service tax under the category of Business Auxiliary Service for the period in question.

Issue 2: Tax Liability for Crane Hiring Services
The main contention raised by the assessee was that the services provided for ONGC were purely for hiring cranes, as indicated in the contract, and did not fall within the scope of Business Auxiliary Service. The assessee argued that since the relevant service category of 'Supply of Tangible Goods Service' was introduced after the period in question, the demand for service tax under Business Auxiliary Service should be dismissed. The Tribunal examined the contract terms, which clearly outlined the hiring of cranes along with operators by ONGC on a monthly operational charges basis. Given the absence of third-party involvement and the nature of the services provided, the Tribunal agreed with the assessee's argument and set aside the demand for service tax under the category of Business Auxiliary Service. Consequently, the appeal filed by the assessee was allowed, and the appeal filed by the Revenue was rejected.

This judgment highlights the importance of interpreting service categories accurately under the relevant legal framework and contract terms to determine the appropriate tax liability for services provided.