Appellant wins service tax case on free repair services, no liability found.

The tribunal ruled in favor of the appellant, finding no service tax liability on repair and maintenance services provided free of cost. The appellant's argument that service tax is leviable only when a service is rendered for consideration was supported by citing relevant case laws. Despite receiving goods for repair under warranty or chargeable basis and paying excise duty on spare parts, as no remuneration was charged for the repair services, the tribunal held that service tax was not applicable. The department failed to prove remuneration received for repair services, leading to the decision in favor of the appellant.

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Issues:
Service tax liability on repair and maintenance services provided free of cost by the appellant.

Analysis:
The appellant, engaged in manufacturing machinery and providing repair services, was issued show cause notices demanding service tax, interest, and penalty. The lower authorities upheld the demands, leading to the appeals. The appellant argued that repair services were provided free of cost, with only excise duty paid on replaced parts. They contended that service tax is leviable only when a service is rendered for consideration. The appellant cited relevant case laws to support their argument.

The Authorized Representative relied on a different case to support the findings of the lower authorities. After hearing both sides and examining the records, the tribunal noted that the appellant received goods for repair from customers under warranty/guarantee schemes or on a chargeable basis. The tribunal observed that the appellant discharged central excise duty on spare parts used in repairs, even though no remuneration was charged for the repair services. The tribunal emphasized that service tax liability arises when there is consideration for the service provided, involving a service, provider, recipient, and consideration. In this case, as no consideration was received for the repair services, the tribunal concluded that service tax was not applicable.

The tribunal found that the department failed to provide evidence that the appellant received remuneration for the repair services, leading to the decision that no service tax liability existed. The tribunal relied on the case laws cited by the appellant and set aside the impugned orders, providing consequential relief. The judgment was pronounced on 11/03/2019 by the tribunal members Shri S K Mohanty and Shri P. Anjani Kumar.

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