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TMI Blog2011 (3) TMI 211X X X X Extracts X X X X X X X X Extracts X X X X ..... f revenue. - 149 of 2008 - - - Dated:- 3-3-2011 - Mr.D.N.Panda, Mr.Rakesh Kumar, JJ. Present for the Appellant: Shri Ms.Reena Khair, Advocate Present for the Respondent: Shri K.K.Jaiswal, SDR PER: D.N.PANDA The appellants being aggrieved by the order dt. 26.12.2007 passed by learned Commissioner (Appeals) came in appeal challenging his decision that services provided by appellants with effect from 1.7.2003 under category of maintenance and repair shall be liable to service tax and the appellants having suppressed the facts, extended period was rightly invokable and penalty under sections 76, 77 and 78 of Finance Act, 1994 (hereinafter referred to as the Act ) was leviable. 2. The first appellate authority in Par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.2,17,645/- pad was appropriated to the Government account; (ii) Interest at the applicable rates under section 75 of the Act, 1994 on the service tax demand was levied; (iii) Penalty of Rs.100/- subject to the maximum limit prescribed under section 76 of the Act was levied; (iv) Penalty of Rs.16,81,235/- under section 78 of the Act was levied holding that no penalty was imposable on the appellant against service tax demand of Rs.7,64,516/- since such amount was deposited by them before the issue of the show cause notice; and (v) Penalty of Rs.1000/- under section 77 of the Act for failure to obtain/amended Registration under section 69 of the Act was levied. 4.1 Order of the learned first appellate authority was chal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... repairing. While repair is one time activity, maintenance is a continuous process of which repairing may be incidental or ancillary. In para 16.4 of the circular, it has been categorically stated that repair or servicing carried out under a contract other than maintenance contract of agreement, was not covered within the purview of service tax prior to 16.6.05. 5. Learned appellate Authority found that retreading of old tyres was an admitted fact. He examined the copy of supply order issued by the appellant from the Army Headquarters, New Delhi. Retreading of old tyre was done through hot pressure for a consideration. In para 9 of the order, he examined the scope of the activity undertaken by the appellant. Appellant s contention that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and maintenance contract executed. The appellant only carried out the activity of retreading of tyres to make that usable which is essentially a manufacturing activity not amounting to rendering of service. But learned Commissioner (Appeals) erred in holding that the appellant was a manufacturer. By letter dated 20.11.2007, the appellant explained that although they were engaged in the manufacturing activity they are not providing maintenance and repair service of those goods. Repair being done to tyres which was not manufactured by them there shall not be taxability. Maintenance and repair was not relating to the goods manufactured by the appellant and no maintenance of tyres manufactured by others shall not make the appellant liable to ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xecuted by the party. Board clarified that to attract service tax contract or agreement need not necessary be maintenance contract or agreement. 8. Heard both sides. 9. What does maintenance or repair meant prior to 16.6.2005 as dealt by Section 65(64) of the Act reads as under: maintenance or repair means any service provided by - (i) any person under a maintenance contract or agreement; or (ii) a manufacturer or any person authorised by him, in relation to maintenance or repair or servicing of any goods or equipment, excluding motor vehicle. 10.1 Analysis of the above section throws light that any service provided under maintenance contract or agreement between the parties were taxable service. Similarly any servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, retreader shall return the tyre on freight pre-paid basis to the consignee and no retreading charges shall be payable. 10.3 There is no doubt that retreading of tyre is a service provided consuming certain goods in the process to add economic life to the used tyre and make the same usable. There was economic activity carried out for consideration. The activity was repair of old tyre for making the same usable. Totality of reading of contract and supply order suggests that there was commercially viable and feasible contract between parties prescribing obligations of each other recognising services to be provided by the appellant was the essence of the contract followed by certain penalties and warranty clauses in the contract. The me ..... X X X X Extracts X X X X X X X X Extracts X X X X
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