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TMI Blog2012 (11) TMI 168X X X X Extracts X X X X X X X X Extracts X X X X ..... demand is under the head "maintenance or repair service" for the period up to 30.4.2006 and thereafter under the head "management, maintenance or repair service", in terms of Section 65(105)(zzg) of the Finance Act, 1994 read with Section 65(64) of the Act. 3. The appellant has three divisions including "Kuttukaran Engine Rebuilders" (KER) and the present dispute pertains to this division which is engaged in the business of reconditioning engines and parts thereof and repairs of other parts of vehicles of all brands. KER did not have any authorization from any manufacturer of vehicles/parts for providing post-sale service to buyers. During the material period, they undertook engine reconditioning works for authorised service stations, local workshops and individual owners of motor vehicles, but the charges received as consideration for such works were not included in the taxable value shown in their ST-3 returns for the period of dispute and did not pay service tax thereon under the head "maintenance or repair service" (prior to 1.5.2006) or "management, maintenance or repair service" thereafter. These facts were gathered by the department through an audit of the appellant's accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, maintenance or repair service" for the subsequent period under Section 65(64) of the Finance Act, 1994 read with Section 65(105)(zzg) of the Act, (b) confirming the demand of service tax and cess against the appellant for the period from 16.6.2005 to 30.9.2007 under Section 73(2) of the Finance Act, 1994, (c) demanding interest thereon under Section 75 of the Act and (d) imposing penalties under Sections 76 to 78 of the Act. 5. Perused the records and heard both sides. 6. The learned Senior Advocate representing the appellant referred to the definition of "maintenance or repairs" under Section 65(64) of the Finance Act, 1994 as it stood during 16.6.2005 to 30.4.2006 and to the definition of "management, maintenance or repair" under the said Section as it stood during the period from 1.5.2006 and argued that, as the activity of reconditioning or restoration or servicing of motor vehicle stood excluded from the definition, all these works/activities on engine or other parts of motor vehicle would also be outside the scope of levy of service tax. It was submitted that maintenance or repair of any part of a motor vehicle was to be understood as maintenance or repair of motor vehi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said activities. The allegation of suppression of facts against the appellant, therefore, was not sustainable. In this context, the learned counsel relied on the Supreme Court's judgments in Collector of Central Excise v. Chemphar Drugs & Liniments 1989 (40) ELT 276 and Continental Foundation Jt. Venture v. CCE 2007 (216) ELT 177 (SC). Moreover, all the relevant information was readily passed on to the department's audit party way back in September 2007. In the circumstances, the extended period of limitation was not invocable and hence the demand raised in the show-cause notice dated 20.8.2008 was liable to be set aside on the ground of limitation. For the same reasons, the penalty imposed on the appellant under Section 78 of the Finance Act, 1994 was also contested by the learned counsel. Of course, other penalties imposed on the appellant were also challenged on the main ground that the appellant did not have liability to pay service tax on the activities in question. 9. The learned Additional Commissioner (AR) reiterated the findings of the adjudicating authority and submitted that the appellant was liable to pay service tax on the activities viz., rebuilding/reconditionin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce provided by: (i) any person under a contract or agreement; or (ii) a manufacturer or any person authorised by him, in relation to : a. management of properties, whether immovable or not; b. maintenance or repair of properties, whether immovable or not; or c. maintenance or repair including reconditioning or restoration, or servicing of any goods, excluding motor vehicles. Explanation - For the removal of doubts, it is hereby declared that for the purposes of this clause, "goods" includes computer software. 11. It cannot be disputed that the activities in question were undertaken by the appellant through KER under contracts/agreements (which might not be in formal written format) with authorised service stations, workshops or owners (individuals or legal entities like companies) of motor vehicles. Again, it is an admitted fact that these activities involved reconditioning or restoration or servicing of IC engines or parts thereof, or other parts of motor vehicles. These IC engines or parts thereof, or other parts of motor vehicles, are admittedly within the scope of the expression "goods or equipment" found in the defin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant (KER) to certain authorised service stations and workshops are available on record. What are seen mentioned in the description column of these bills are various repair works on engine assembly and parts thereof. There is no mention of whole motor vehicle in the description column of these bills, which clearly indicates that the appellant (KER) was getting only the dismounted engines or parts thereof for repair works, from the workshops and, after completion of the works, returning the engines/parts to the workshops for being mounted. 12. On the above facts, it has to be held that, in respect of motor vehicles brought to authorised service stations or workshops by the vehicle-owners for repairs/maintenance, the appellant was getting only the dismounted engines or other parts from such authorised service stations/workshops for undertaking specified job works such as rebuilding, reconditioning, restoration, repair and servicing and, upon completion of such works, returning the engines/parts to the authorised service stations/workshops. This activity of the appellant squarely fell within the ambit of "maintenance or repair including reconditioning or restoration or servicin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irtue of the exclusion clause of the definition of "maintenance or repair" and "management, maintenance or repair". 15. Coming to the limitation issue, we note that the show-cause notice was issued on 20.8.2008 demanding service tax for the period from 16.6.2005 to 30.9.2007 by invoking the extended period of limitation on the alleged ground of suppression of facts by the noticee. The appellant had allegedly suppressed material facts deliberately with intent to evade payment of service tax. The adjudicating authority found that the assessee had not furnished all material details in their ST-3 returns and that such details came to be disclosed only as a result of audit conducted by the department. On this basis, the proviso to Section 73(1) of the Finance Act, 1994 was invoked for demanding service tax for said period. In the present appeal, it is the case of the appellant that they bona fide believed that they had no tax liability in respect of the activities in question and hence did not include the relevant particulars in their returns. The learned counsel has argued that the entire dispute resulted from divergent interpretations of the exclusion clause contained in the definiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts, it appears to us that there was suppression of relevant information by the appellant with intent to evade payment of service tax. Some of the relevant facts were first disclosed to the department only on 5.9.2007, the date on which the appellant submitted a letter to the Superintendent (Audit). Obviously, this disclosure of information was not voluntarily made as it was made in the face of audit objections. In the result, the invocation of extended period of limitation requires to be upheld. For the same reason, it has to be held that the appellant's conduct invited penalty under Section 78 of the Finance Act, 1994. In view of this position, the other penalties are liable to be set aside. 16. In view of the findings recorded by us, it is ordered as under: (i) The services provided by the appellant to authorised service stations and workshops during the period of dispute are classifiable as "maintenance or repair service" up to 30.4.2006 and "management, maintenance or repair service" from 1.5.2006 and, consequently, the appellant is liable to pay service tax on these services. But they are not liable to pay service tax on maintenance or repair of motor vehicles dire ..... X X X X Extracts X X X X X X X X Extracts X X X X
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