2008 (11) TMI 130 - AT - Service Tax

Appellate Tribunal CESTAT: No Pre-Deposit Required, Commissioning of CNG Kits Not Taxable

The Appellate Tribunal CESTAT Ahmedabad dispensed with the pre-deposit condition and remanded the matter to the Commissioner (Appeals) for a decision on ... Purchasing and selling of CNG kits also including installation, erection and commissioning of said CNG kits in the motor vehicle of the customers - demand under head Erection, commissioning and installation services - appellant’s contention that entire value received from customers, was on account of sale & fitting of CNG so revenue cannot demand service tax on the entire amount so received, is agreeable - Commissioner (Appeals) has not dealt with appeal on merits so matter is remanded Issues:1. Non-compliance of stay order regarding pre-deposit of duty and penalty.2. Tax imposition on commissioning of CNG kits under 'Erection, commissioning and installation' services.3. Dispute over the applicability of service tax on the entire value received for sale and fitting of CNG kits.Issue 1: Non-compliance of stay order regarding pre-deposit of duty and penaltyThe Appellate Tribunal CESTAT Ahmedabad addressed the issue of non-compliance with the stay order requiring a deposit of 25% of total dues. The Commissioner (Appeals) rejected the appeal based on this non-compliance. However, after considering the circumstances, the Tribunal dispensed with the pre-deposit condition and proceeded to decide the appeal on its merits. The Tribunal set aside the impugned order and remanded the matter to the Commissioner (Appeals) for a decision on merits without further insistence on pre-deposit.Issue 2: Tax imposition on commissioning of CNG kits under 'Erection, commissioning and installation' servicesThe case involved the appellants purchasing and selling CNG kits, including installation in customer vehicles. The revenue sought to impose tax on the commissioning of CNG kits, considering it as 'Erection, commissioning and installation' services. The demand for tax of approximately Rs.15 lakhs on the total value received was confirmed. The appellant argued that fitting CNG kits should not be subject to tax and that the revenue cannot levy service tax on the entire amount received from customers. The Tribunal prima facie agreed with the appellant's contention, noting that the deposited amount of Rs.33,000 would be leviable on fitting charges. Consequently, the Tribunal dispensed with the pre-deposit of the balance tax amount and penalty.Issue 3: Dispute over the applicability of service tax on the entire value received for sale and fitting of CNG kitsThe Tribunal acknowledged the appellant's argument that the entire value received from customers, including the sale and fitting of CNG kits, should not be considered as 'Erection and commissioning services' subject to service tax. As the Commissioner (Appeals) did not address the appeal on merits, the Tribunal set aside the order and remanded the matter for a decision on the substantive issues without requiring further pre-deposit. The petition and appeal were disposed of accordingly.