Order Date: 24 February 2023

Parties: M/s. Servalaxmi Services vs. The Commissioner of Central Excise and Service Tax

Facts – 

• The Appellant, M/s. Servalaxmi Services the manufacturer of parts for paper mill machinery had undertaken repair activity which, according to them, was incidental to their manufacturing activity.
• Verification was conducted by the Officers of the Revenue, during which the proprietor of the appellant stated that they had carried out the repair work under the bona fide belief that the same was not covered under the Service Tax net and that there was no written agreement or contract for doing so.
• The Revenue issued an SCN proposing to demand the Service Tax, in response to which the appellant filed a detailed reply, but the authority not satisfied with the explanation proceeded to confirm the demand as proposed in the SCN.

Issue – 

• Whether the Service Tax demand made against the appellant is acceptable?

Orders – 

• The Court relied on Delhi Bench of the CESTAT in the case of M/s. Crimpson Electronics vs. Commissioner of Central Excise and found that in the said orders, there was no record available to show the manner in which the activities of repair work were carried out by the taxpayer since there was no contract or agreement. Accordingly, impugned order is set aside.
• The Court stated that in view of the above rulings, the demand cannot sustain, for which reason the impugned order is set aside.
• The appeal is allowed with consequential benefits, if any, as per law.