2024 (7) TMI 622 - AT - Service Tax

Levy of service tax - Business Auxiliary Service - activity of electroplating, filter components of automobiles, supplied by the manufacturers of auto parts, on job work basis - HELD THAT - The issue is no longer res integra on merits. It is found that Tribunal, in the case of M/S. INTERPLEX ELECTRONICS INDIA PVT. LTD. VERSUS THE COMMISSIONER OF SERVICE TAX, BANGALORE 2013 (5) TMI 451 - CESTAT BANGALORE , held that electroplating amounts to manufacture. As the activity of electroplating amounts to manufacture, no service tax is payable on the same. To this extent, the impugned order is not sustainable and is liable to be set aside as the appeal on this issue alone - Appeal allowed.

Summary

Issues involved:
Whether the appellants are required to pay Service Tax on the activity of electroplating filter components of automobiles on a job work basis.

Analysis:

1. The appellant was engaged in the jobwork of electroplating filter components of motor vehicles and was paying VAT on materials used. The Department issued a Show Cause Notice seeking to recover service tax, which was confirmed by the Order-in-Original. The Commissioner (Appeals) upheld the order. The appellant argued that electroplating amounts to manufacture, citing a Tribunal case and Supreme Court judgment. The appellant claimed the activity was of a composite nature and covered under a specific notification. The appellant also contended that the show cause notice was time-barred due to settled legal interpretations and no intent to evade duty.

2. The Revenue reiterated the findings of the Original Authority and the Commissioner (Appeals). The Tribunal analyzed whether the appellants were required to pay Service Tax on electroplating activity. Referring to a previous Tribunal case, the Tribunal held that electroplating amounts to manufacture. The Tribunal considered the section note to Section XVI and held that if a process amounts to manufacture, no service tax is payable. Consequently, the Tribunal found that no service tax was payable on the electroplating activity. The appeal was allowed, and consequential relief was granted.

In conclusion, the Tribunal ruled in favor of the appellant, holding that the activity of electroplating filter components amounted to manufacture, and thus, no service tax was payable. The judgment emphasized the legal interpretation regarding electroplating as manufacturing activity and the exclusion from service tax liability in such cases. The decision provided clarity on the taxability of the appellant's jobwork activity and set aside the impugned order, granting relief to the appellant.