2024 (2) TMI 968 - AT - Service Tax

Nature of activity - activity amounting to manufacture of providing of services - Classification of services - Business Auxiliary Service, Business Support Service and Renting Services or not - appellants were engaged in providing the servies to their customers who have sent the said plates/ coils for cutting - Demand on handling charges and rent charged - HELD THAT - The appellants are job-workers inasmuch as they are cutting the coils/ plates of their clients according to the specifications given to them; they are collecting job charges for the same; they are discharging service tax on the coils/ plates which are ultimately used in the manufacture of non-excisable goods by their clients; they have not discharged service tax on the goods which were ultimately used in the manufacture of excisable goods which are cleared on payment of duty by their clients. Learned Counsel for the appellants argues that the job-work undertaken by them amounts to manufacture in view of the decision of the Tribunal in the case of JINDAL STAINLESS STEELWAY LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIGAD 2014 (9) TMI 658 - CESTAT MUMBAI , where it was held that the activity of the appellant is amount to manufacture and appeal was allowed on the merit as well as on limitation. It is found that as the job-work undertaken by the appellant amounts to manufacture, service tax cannot be levied on them under both Heads Business Auxiliary Service and Business Support Service . Therefore, any discussion on other issues like cumduty price, extended period, small-scale exemption become redundant and therefore, other issues not taken up. Demand on handling charges and rent charged - HELD THAT - It is found that they are incidental to the job-work and it cannot be alleged that they are providing separately these services. It is not the case of the Department that the appellants are providing these services separately to different clients. Moreover, even if it is construed that the appellant is providing a bundle of services, the main service i.e. job-work of cutting plates/ coils is to be considered for levy of service tax. In view of the aforesaid reasoning, the job-work undertaken by the appellants does not attract levy of any service tax. Thus, the job-work undertaken by the appellants does not attract levy of any service tax - appeal allowed.

Summary

Issues involved:
The issues involved in the judgment are whether the appellants were liable to pay service tax for job-work done on goods used in the manufacture of excisable goods, whether the job-work undertaken by the appellants amounts to manufacture, and whether handling charges and storage charges are separately taxable services.

Issue 1: Liability to pay service tax for job-work on goods used in the manufacture of excisable goods:
The appellants, engaged in job-work of cutting steel coils/plates, had paid service tax on job-work done on goods used in the manufacture of non-excisable goods but not on goods used in the manufacture of excisable goods. A show-cause notice was issued seeking payment of service tax, which was confirmed by the Commissioner (Appeals). The appellants contended that the job-work undertaken by them amounts to manufacture, citing relevant notifications and exemptions. The Tribunal, referencing a previous case, held that since the job-work amounts to manufacture, service tax cannot be levied under "Business Auxiliary Service" and "Business Support Service". Therefore, the demand for service tax on the goods used in the manufacture of excisable goods was dismissed.

Issue 2: Whether job-work undertaken by the appellants amounts to manufacture:
The Tribunal noted that the appellants were job-workers cutting coils/plates according to client specifications and collecting job charges. The Tribunal referenced a previous case where it was held that the appellant's activity amounts to manufacture. As the job-work was considered manufacturing, the Tribunal ruled that service tax could not be levied under "Business Auxiliary Service" and "Business Support Service". Consequently, other issues like cum-duty price, extended period, and small-scale exemption were deemed irrelevant.

Issue 3: Taxability of handling charges and storage charges:
The Tribunal found that handling charges and storage charges were incidental to the job-work and not separately provided services. It was noted that the appellants did not provide these services separately to different clients. Even if construed as a bundle of services, the main service of job-work was the focus for service tax levy. Therefore, the Tribunal concluded that the job-work undertaken by the appellants did not attract service tax, and the appeal was allowed with consequential relief.