Service Tax
TRT-2025-
Cestat Ahmedabad
Date:-27-02-23
In:-
Issue Favourable to Tax Payer ?:-
Order Date: 27 February 2023
Parties: PSL LIMITED vs. C.C.E. & S.T. RAJKOT
Facts –
- The Appellant, M/s PSL Limited is engaged in undertaking epoxy coating of pipelines. The authority had made a demand of service tax, interest, and imposition of penalty under the head of Business Auxiliary Service for the activity of Epoxy Coating of pipelines undertaken by the appellant.
- The learned counsel for the appellant pointed out that the activity of Epoxy Coating of pipes does not qualify as the “production” of goods and therefore, the said activity is not covered under Business Auxiliary Service. The activity was not carried out “on behalf of the client” and there was no third party involved in this transaction.
- It was argued to set aside the penalties imposed under Sections 76, 77, and 78 of the Finance Act, 1994 as the issue involved relates to the interpretation of the statute.
Issue –
- Whether the appellant is liable to pay the service tax, interest, and penalty?
Orders –
- The Tribunal relied on the own case wherein the matter was settled by High Court providing that it is an admitted position that the liability arose only with effect from 10-9-2004 when clause (v) came to be inserted in the definition of “business auxiliary services” so as to include “production of goods on behalf of the client”. Hence, it cannot be gainsaid that the services rendered prior to the said date were required to be excluded while computing the tax liability. In the circumstances, no infirmity is found in the order of the Tribunal in remanding the matter to the original adjudicating authority for re-quantification of the demand by extending the above benefits to the respondent.
- It cannot be said that there was any suppression or intent to evade service tax and accordingly, did not find any reason for the imposition of the penalty.
- The Court found that the revenue was fully aware of the activities carried on by the appellant and the said activities were taxable, but never advised to start paying tax on the said activity.
- The Court stated that the demand of service tax and interest is upheld, and the penalties imposed under Sections 76, 77, and 78 are set aside. The appeal is partly allowed in the above terms.
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