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Issue ID : 57
- 0 -

Applicability of Service Tax on repairing of defective compressors

Date 16 Jan 2006
Replies3 Answers
Views 1027 Views
Asked By
Whether the Dealer of Kirloskar Compressor who takes defective compressors from customers and supply the same to Kirloskar for repairing the same is liable for service tax. whether the dealer is liable ??
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Replied on Jan 17, 2006
2. This issue can be decided on facts and circumstances. Who is responsible to repair, who is receiving money, whether it is under warranty or not and like other issues to be looked into.
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Replied on Jan 17, 2006
3.

This is a case where one needs to keep a close look at various aspects of the services being rendered by the captioned 'Dealer'. Firstly, Section 65(64) of the Finance Act 1994 deals with the 'Maintainence or repair services'. These services are of a wide import and also cover those persons (even not being manufacturer), who provide any service 'in relation to'Maintainence or repair. The words 'in relation to' is of paramount importance in this regard. Secondly, the services provided by the captioned dealer are undoubtedely performed 'in relation to' the Maintainence or repair of the customers goods. It would not be important whether the actual repair/ maintainence is performed by the dealer or not. Thirdly, tax would be liable to be paid if and only if the captioned dealer charges any amount for such activity. It is thus imperative to take a keen look at the facts of the case, the arrangement of the dealer with the Company and other such instrumentalities.

- 0
Replied on Jan 20, 2006
1. In my Opinion ,since the dealer has taken back the Defective Compresssors from the customers and supply the same to Kirloskars for repairing thus removing the defect which is present at the time of sale of compressors,as you have mentioned that the compressors are defective one,thus theres seem to be no extra service in the compressor thus no service tax is liable on the dealer

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