2023 (9) TMI 808 - AT - Service Tax

Appellant's Machining Work Not Business Auxiliary Service for Service Tax

M/s Vardhaman Axles & Wheels Private Limited Versus Commissioner of Central Excise, Bolpur

The Tribunal held that the appellant's machining work on forged wheels does not qualify as 'Business Auxiliary Service' (BAS) for service tax purposes as ... Classification of services - Business Auxiliary Services or not - service relating to machining work on the forged wheels received from M/s Durgapur Steel Plant (DSP) under job work and sent it back the same to the principal manufacturer - HELD THAT:- The said issue came up before this Tribunal in the case of M/S FERRO SCRAP NIGAM LIMITED VERSUS COMMR. OF CGST & EXCISE, BOLPUR (VICE-VERSA) [2021 (1) TMI 711 - CESTAT KOLKATA], wherein this Tribunal has observed For the period prior to 16.06.2005, the definition of BAS under Section 65(19)(v) of the Act, inter-alia, mean any service in relation to production of goods on behalf of the client. The Principal Bench in assessee’s own case, M/S FERRO SCRAP NIGAM LIMITED VERSUS CCE, RAIPUR [2014 (1) TMI 1049 - CESTAT NEW DELHI] as relied by the assessee, has already observed in identical set of facts that there is no third person in the instant case, whereas the tax can be levied under BAS only in case the service is provided on behalf of the client i.e. there would be involvement of three parties. As the issue has been settled in favour of the appellant, therefore, the appellant is not liable to pay service tax on the activity of machineries and accordingly, the impugned order is set aside. Appeal allowed. Issues Involved:1. Whether the appellant's activity of machining work on forged wheels qualifies as 'Business Auxiliary Service' (BAS) and is liable for service tax.2. Applicability of the exemption under Notification No. 8/2005 for the period after 16.06.2005.3. Demand on shifting, transportation, loading, and unloading within the client's steel plant.Summary:Issue 1: Classification of Machining Work as Business Auxiliary Service (BAS)The appellant is engaged in machining work on forged wheels received from M/s Durgapur Steel Plant (DSP) and returning them after job work. The Revenue classified this activity under 'Business Auxiliary Service' (BAS) and demanded service tax for the period 2005-06 to 2009-10. The Tribunal referenced the case of Ferro Scrap Nigam Limited, where it was held that such activities do not fall under BAS as there is no involvement of a third party. The definition of BAS requires the service to be provided on behalf of the client, involving three parties, which is not the case here. Consequently, the Tribunal found that the appellant's activity does not qualify as BAS and set aside the demand.Issue 2: Exemption under Notification No. 8/2005 for Post-16.06.2005 PeriodFor the period after 16.06.2005, the Tribunal noted that the definition of BAS was amended to include 'processing' of goods. The appellant claimed exemption under Notification No. 8/2005, which exempts service tax on production or processing of goods for the client using raw materials or semi-finished goods supplied by the client. The Tribunal found that the appellant's activities met the criteria for this exemption, as the processed scrap was returned to DSP for use in manufacturing dutiable steel products. Therefore, the demand for service tax for this period was also set aside.Issue 3: Demand on Shifting, Transportation, Loading, and UnloadingThe Tribunal referred to its previous decision in the appellant's own case, where it was held that shifting, transportation, loading, and unloading within the client's steel plant do not fall under 'Cargo Handling Services.' Consequently, the demand related to these activities was not sustainable.Conclusion:The Tribunal concluded that the appellant is not liable to pay service tax on the machining work under BAS, granted exemption under Notification No. 8/2005 for the post-16.06.2005 period, and rejected the demand for shifting and transportation services within the plant. The appeal filed by the appellant was allowed with consequential relief, and the appeal by the Revenue was rejected.