Court rules supplying Heated Thermic fluid for manufacturing not taxable.

The court upheld the decision in favor of the assessee, ruling that the supply of Heated Thermic fluid for manufacturing Pre-cured Tread Rubber did not constitute "Business Auxiliary Service" subject to service tax. The judge referenced a previous case with a similar issue and concluded that the activity of supplying heated fluid to other units did not fall under the definition of taxable service. The appeal filed by the Revenue was rejected, affirming the lower authorities' decision in favor of the assessee.

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Issues:
Service tax demand on the supply of Heated Thermic fluid for manufacturing of Pre-cured Tread Rubber.

Analysis:
The appeal was filed by the Revenue against the Order-in-Revision No. 07/2008/ST, dated 29-9-2008. The issue revolved around the service tax demand on the supply of Heated Thermic fluid for manufacturing of Pre-cured Tread Rubber for other units. Both lower authorities ruled in favor of the assessee, stating that this activity was not liable for tax. The Revenue was dissatisfied with this decision and hence filed an appeal.

The Revenue contended that the activity undertaken by the party constituted a service as per the definition of 'Business Auxiliary Service' under section 65(19) of the Finance Act, 1994. It was argued that the manufacturing process carried out by the party was incomplete without the supply of heat energy, which was provided by the party to the client on an hourly charge basis. The Revenue highlighted that no statutory sale bill/invoice was issued, indicating that the transaction was a service and not a sale.

The Counsel for the respondents referenced a Final Order dated 15-5-2009 by the South Zonal Bench of the Tribunal at Chennai, which had already decided a similar issue. The presiding judge noted that the issue at hand had also been addressed by a Co-ordinate Bench in the case of General Precured Treads (P.) Ltd. v. CC&CE [2009] 21 STT 483 (Chennai - CESTAT). The judge quoted the ratio from the mentioned case, emphasizing that the activity of supplying heated fluid to other units did not amount to rendering "Business Auxiliary Service" and, therefore, was not subject to service tax. Consequently, the judge upheld the order passed by the Commissioner, rejecting the appeal filed by the Revenue.

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