Commissioners Of Central Excise vs M/S Ketan Engineering Services

[ Arising out of OIO-01-ST-2007 dtd 31.7.2007 Passed by Commissioners of Central Excise, Customs and Service Tax-SURAT-I ]

Commissioners of Central Excise, Customs and Service Tax-SURAT-I - Appellant(s)

Vs.

M/s Ketan Engineering Services - Respondent (s)

Represented by :

For Assessee : Shri Anand Mishra, Advocate For Revenue : Shri Alok Srivastava , Authorised Representative

For approval and signature :

Mr. P.K. Das, Hon'ble Member (Judicial) Mr. P.M. Saleem, Honble Member (Technical)

1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3 Whether their Lordships wish to see the fair copy of the Order?

Seen 4 Whether Order is to be circulated to the Departmental authorities?

Yes

CORAM :

Mr. P.K. Das, Hon'ble Member (Judicial) Mr. P.M. Saleem, Honble Member (Technical)

Date of Hearing / Decision : 30/6/2015

ORDER No. A/10983 / 2015 dtd 30/6/2015

Per : Mr.P.K. Das,

Revenue filed this appeal against the Order of the Commissioner, where the proceedings initiated under the Show Cause Notice dated 28.2.2007 was dropped.

2. After hearing both the sides and on perusal of records, we find that the respondent were engaged in providing the service of maintenance and repairs of plant and equipments of industrial clients like M/s Essar Steels Ltd and M/s Reliance Industries Ltd, which was chargeable to Service Tax under Section 65(64) of the Finance Act 1994. A show cause notice dtd 18.2.2007 was issued proposing demand of Service Tax amounting to Rs 50,02,104/- alongwith interest and to impose penalty under the category of Repair and Maintenance Service for the period July 2003 to March 2005.By the impugned order, the Commissioner of Customs & Central Excise, Surat I, dropped the proceedings initiated by show cause notice dtd 28.6.2007. Revenue filed this appeal against the said order.

3. We find that the Adjudicating Authority dropped proceedings following the decision of the Tribunal in the case of CCE, Jaipur Vs Dusad Transformers and Switchgears P Ltd [2007(5)STR.37 (Tri. Del)]. It has also followed the Board circular No B1/6/2005-TRU dtd 27.7.2005. The Adjudicating Authority observed that in the absence of any maintenance or repair contract, demand based on rate or value contract work orders are not sustainable.

4. The Learned Authorised Representative on behalf of the Revenue submits that the Tribunal in the case of CCE, Allahabad vs Anand Transformers Pvt Ltd [2014(33)STR.314 (Tri.Del.)] distinguished the decision of the tribunal in the case of Dusad Transformer and Switch Gear Pvt Ltd (supra) and allowed the appeal filed by the Revenue. The relevant portion of the said decision is reproduced below:

 15.?In the case on hand, the respondent-assessee is admittedly a manufacturer of transformers and also undertakes to provide repairing service to several firms and had received payments for the repairing services provided. The assessee thus clearly falls within the second limb of the expression maintenance or repair as defined in Section 65(64) of the Act and must be deemed to have rendered the taxable service under Section 65(105)(zzg). The record also discloses and this is not disputed, that the assessee had not filed ST-2 returns disclosing the value of those services provided, for remitting service tax. Ld. Consultant for the assessee states that this omission to file service tax return for the period in question was on account of the assesees own misinterpretation, of immunity to service tax and that this interpretation of the assessee is also justified in view of the earlier orders of this Tribunal in Dusad Transformers & Switchgears (I) Ltd., Cochin Shipyard Ltd. and UNI Power Ltd. It is also contended on behalf of the assessee that appellate authoritys order and C.B.E. & C. Circular dated 27-7-2005 fortifies the assessees construction of the relevant provisions and that there was no legality in the adjudicating authority invoking the extended period of time under the proviso to Section 73(1) of the Act.

15.?We are satisfied that invocation of the extended period of limitation, in the facts and circumstances of the case is justified and valid.

16.?Where an assessee interprets provisions of a taxing legislation, which it may do, it takes the risk of gross misinterpretation of its liability as well. A true and fair construction of the relevant statutory provisions leave no doubt of the trajectory of the charging provisions, namely that where a manufacturer or any person authorized by such manufacturer undertakes repair of any goods (excluding a motor vehicle) in the nature of maintenance or repairs services, such activity is exigible to service tax. We also note that the Boards Circular dated 27-7-2005 (as referred to in Dusad Transformers & Switchgears (I) Ltd. is a TRU clarification. In para 16.4 the clarification suggests that prior to 16-6-2005, maintenance or repair carried out under a maintenance contract or agreement was alone covered under service tax. No authority has placed before us to contend that the clarification by TRU dated 27-7-2005 is binding. The TRU clarification, as set out in paragraph 16.4 thereof proceeds on only a partial analysis of Section 65(64) of the Act, inasmuch as it talks only of clause (i) and not clause (ii) of Section 65(64), to which we have already alluded (supra) and have recorded our analysis thereon. 

5. The Learned Advocate on behalf of the Respondent submits that the said decision would not apply in the present case. In that case, the respondent/assessee was a manufacturer. We are unable to accept the contention of the Learned Advocate for the reason that the provisions of Section 65(64) and (105) (zzg) of the Act provides where a manufacturer or any person authorized by him provides a service in relation to the Maintenance, Repair or Servicing of any goods, or equipments excluding a motor vehicle, such service provided is exigible to Service Tax. We have also noticed that the definition of the Repair and Maintenance Service fallings under 65(64) of the Finance Act 1994 provides any person who is under maintenance contract or agreement which would include rate contract or value contract as held by the Tribunal in the case Anand Transformers Pvt Ltd (supra). The Learned Advocate strongly relied upon the decision of the Tribunal in the case of Basant Enterprises vs. CCE, Bhopal [2011(24) STR. 352 (Tri.Del.)]. We find that the recent decision of the Tribunal in the case of Anand Transformers Pvt Ltd (supra) would be applicable in the present case. Hence, the impugned order cannot be sustained.

6. In view of the above discussions and following the decision of the Tribunal in the case of Anand Transformers Pvt Ltd (supra) the demand of tax alongwith interest as proposed in the show cause notice are upheld and the imposition of penalty is dropped. The appeal filed by the Revenue is allowed in the above terms.

(Dictated and pronounced in the Court)

(P.M. Saleem) (P.K. Das) Member (Technical) Member (Judicial)

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