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2019 (12) TMI 235 - AT - Service TaxClassification of services - services of retreading of worn-out tyres of automobiles - Maintenance or Repair Service or not - demand alongwith penalty - HELD THAT - Various Benches of the Tribunal has consistently held that retreading of tyre falls under the category of Maintenance, Management and Repair Service and is liable to service tax - Further, the Apex Court has also in the case of SAFETY RETREADING COMPANY (P) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, SALEM, M/S TYRESOLES INDIA PRIVATE LMITED VERSUS THE COMMISSIONER OF CENTRAL EXCISE, GOA AND M/S LAXMI TYRES VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE 2017 (1) TMI 1110 - SUPREME COURT has specifically held that retreading of tyre is a service which falls under the category of Management, Maintenance and Repair Service . Penalty u/s 76 - HELD THAT - The issue relates to interpretation of the service and there were divergent views during the relevant time, therefore the benefit of Section 80 to the appellant is allowed and penalty dropped. There is no infirmity in the impugned order which is upheld by dismissing the appeal of the appellant to the extent of service tax which the appellant is liable to pay - penalty set aside - appeal allowed in part.
Issues:
1. Interpretation of the scope of taxable service under 'Maintenance or Repair Service' category. 2. Applicability of service tax on retreading of worn-out tyres of automobiles. 3. Validity of penalties imposed under Sections 76 and 77 of the Finance Act. Analysis: Issue 1: Interpretation of the scope of taxable service under 'Maintenance or Repair Service' category The appeal addressed the interpretation of the definition under Section 2(64) and Section 65(9) of the Finance Act 1994 concerning the scope of taxable services falling under 'Maintenance or Repair Service'. The appellant argued that their service of retreading tyres should not be classified under this category, citing relevant notifications and legal precedents. However, the Commissioner (Appeals) rejected this argument, leading to the appeal. Issue 2: Applicability of service tax on retreading of worn-out tyres of automobiles The core dispute revolved around whether the activity of retreading worn-out tyres of automobiles is subject to service tax under the 'Management, Maintenance, and Repair Service' category. The appellant contended that retreading of tyres should be excluded from service tax under Section 65(64) of the Finance Act, supported by a High Court decision. Conversely, the respondent argued that various judicial forums, including the CESTAT and the Apex Court, have consistently held that retreading of tyres attracts service tax. The Tribunal ultimately upheld that retreading of tyres falls under the taxable category of 'Maintenance, Management, and Repair Service'. Issue 3: Validity of penalties imposed under Sections 76 and 77 of the Finance Act Regarding the penalties imposed under Sections 76 and 77 of the Finance Act, the appellant contested their imposition, claiming that the impugned order lacked proper appreciation of facts and law. The Tribunal, after considering the submissions of both parties and relevant precedents, extended the benefit of Section 80 to the appellant due to divergent views during the relevant period. Consequently, the penalty under Section 76 was dropped, while the demands were confirmed. In conclusion, the Tribunal dismissed the appeal regarding the service tax liability on retreading of tyres, upholding the impugned order. However, the penalty under Section 76 was dropped based on the interpretation of the service and the existence of conflicting views during the relevant period. The judgment provided a detailed analysis of the legal principles and precedents governing the taxation of services related to tyre retreading, emphasizing the consistent application of service tax in such cases.
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