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2023 (2) TMI 1095 - AT - Service TaxLevy of Service tax - Business Auxiliary Service - activity of Epoxy Coating of pipelines undertaken by the appellant - HELD THAT - Reliance placed in the case of CCE., CUS., DAMAN VERSUS PSL CORROSION CONTROL SERVICES LTD. 2010 (3) TMI 784 - GUJARAT HIGH COURT where it was held that It is an admitted position that the liability arose only with effect from 10-9-2004 when clause (v) came to be inserted in the definition of business auxiliary services so as to include production of goods on behalf of the client . Hence, it cannot be gainsaid that the services rendered prior to the said date were required to be excluded while computing the tax liability. The facts in the instant case are similar. Relying on the aforesaid decision of Hon ble High Court, while demand of service tax and interest is upheld, the penalties imposed under Section 76, 77 and 78 are set aside invoking Section 80 of the Finance Act, 1994. Appeal allowed in part.
Issues:
Demand of service tax, interest, and penalty under Sections 76, 77, and 78. Analysis: 1. Levying Service Tax on Epoxy Coating Activity: - The appellant argued that the demand under Business Auxiliary Service was not valid as the activity of Epoxy Coating of pipelines did not qualify as "production" of goods before 16.06.2005 and was not conducted "on behalf of the client." - They contended that the activity was on a principal-to-principal basis for a specific client, and there was no involvement of a third party, hence not falling under Business Auxiliary Service. - The appellant also claimed a bonafide belief that the activity did not qualify as Business Auxiliary Service, citing lack of suppression and no grounds to invoke the extended period of limitation. 2. Penalties Imposed and Section 80 of the Finance Act, 1994: - The appellant sought to set aside the penalties under Sections 76, 77, and 78 by invoking Section 80 of the Finance Act, 1994, due to the issue relating to the interpretation of the statute. - The Authorized Representative relied on previous decisions to support the classification of the activity as Business Auxiliary Service, citing Tribunal and High Court approvals. 3. Judicial Precedents and High Court Decision: - The Tribunal examined the appellant's case previously and settled the matter, with the High Court upholding the demand for service tax but requiring re-quantification of the tax amount. - The High Court emphasized the need for documentary evidence to support claims for benefits like CENVAT credit on coating material and input services, with penalties being set aside under Section 80 of the Finance Act, 1994. 4. Final Decision and Dismissal of Appeal: - The Tribunal dismissed the appeal, upholding the demand for service tax and interest while setting aside the penalties under Sections 76, 77, and 78, in line with the High Court decision and invoking Section 80 of the Finance Act, 1994. - The judgment concluded that there was no legal infirmity in the Tribunal's order, and no substantial question of law arose for interference, leading to the partial allowance of the appeal based on the High Court decision. This comprehensive analysis outlines the key arguments, previous decisions, application of legal provisions, and the final judgment in the case involving the demand of service tax, interest, and penalties under Sections 76, 77, and 78, as decided by the Appellate Tribunal CESTAT AHMEDABAD.
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