Business Auxiliary Service classification failed for steam unit operations, leaving the service tax demand unsustainable.

Supplying and operating Steam Generating Units with manpower and allied operational support at ONGC sites was treated as outside Business Auxiliary Service for the relevant pre-amendment period. The service arrangement did not fit the taxable category relied upon by the department, so the service tax demand could not be sustained. The activity was therefore not liable to service tax on the basis alleged.

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Issues: Whether the activity of supplying and operating Steam Generating Units for ONGC was taxable as Business Auxiliary Service and whether service tax was payable for the prior period.

Analysis: The arrangement was for providing steam generating units with manpower and allied operational support for use at ONGC sites. The activity was held not to answer the description of Business Auxiliary Service for the relevant period, as the demand could not be sustained under the pre-amendment legal position and the service did not fall within the taxable category relied upon by the department.

Conclusion: The demand of service tax was not sustainable and the appellant was held not liable to pay service tax on the activity.

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