TaxTMI 
TaxTMI 
2014 (5) TMI 1023
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....e does not amount to reconditioning/repairing of motor vehicles which is excluded from the purview of `Maintenance and Repair service'. The appellant controverted the said stand on the ground that the activity of rebuilding or repair of engines and other parts of motor vehicles inter alia means maintenance or repair service of motor vehicles, and excluded from the purview of service tax liability. 3. However, without accepting the explanation offered by the appellant, they were imposed with service tax for an amount of Rs 67,28,530/- for the period from 16/06/2005 to 30/09/2007. It was inter alia alleged that there was deliberate suppression on the ground that the amount involved in respect of repair of motor vehicles/parts were not included in the returns and penalty was proposed. 4. After hearing the appellant, the Commissioner of Central Excise confirmed the demand and the appellant was called upon to pay service tax with interest and penalty. 5. The appellant preferred an appeal before the Customs, Excise and Service Tax Appellate Tribunal. 6. The Tribunal found that in respect of motor vehicles brought to authorised service stations or workshops by the vehicle ....
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....s rendered by the Appellant to authorized service stations and workshops in respect of IC engines and other parts of motor vehicles is to be upheld. iv) Is the Tribunal right in its finding with respect to limitation and invocation of the extended period under the proviso to Section 73(1) of the Finance Act, 1994 in the present case. v) Is the Tribunal right in its findings that the penalty under Section 78 of the Finance Act, 1994 has been correctly levied in the present case. vi) Is the Tribunal right in its findings that interest under Section 75 of the Finance Act is payable in the present case." 9. Primarily two questions arise for consideration. One is whether maintenance or repair service of motor parts are entitled for exclusion in terms of Clause 64 of Section 65 of the Finance Act 1994 with effect from 16/06/2005 and secondly whether the department is entitled to invoke the extended period of limitation as per proviso to Section 73(1) of the Finance Act 1994 from the facts and circumstances of the case. 10. Section 65(64) of the Finance Act 1994 with effect from 16/06/2005 defines maintenance or repairs as under: "Maintenance or Repairs" means any servic....
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....r vehicle as defined under the Motor Vehicles Act, 1988. On a reading of the definition of motor vehicle, it would be clear that a completed vehicle which could be taken on road alone is a motor vehicle and separate parts of a motor vehicle cannot be termed as motor vehicle. If the intention of the legislature was to exempt repairing, reconditioning, maintenance etc. in respect of parts of a motor vehicle, it was not difficult for the legislature to have specifically mentioned that repair, maintenance etc. of parts of a motor vehicle are also eligible for exemption. 16. The learned senior counsel for the petitioner argued that there was dispute as to whether there is an obligation to pay service tax on account of the specific exclusion of motor vehicles from the liability to pay tax. Therefore, it is not a case where the department was entitled to invoke proviso to Section 71(3) to have the benefit of the extended period of limitation. Reference is made to the judgment in Collector of Central Excise v. Chemphar Drugs & Liniments [1989 (40) E.L.T 276 (S.C)]. Specific reference is made to paragraph 8 in which the Supreme court held as under: "Something positive other than mere ....
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....ement of fact must be wilful." 19. In order to contend that a situation for imposing penalty had not arisen in this case, the learned senior counsel relied upon the judgment in Commissioner of Service Tax Bangalore v. Motor World [2012 (27) S.T.R 225 (Kar)]. That was a case in which the Division Bench of Karnataka High Court has considered an instance where penalty is imposed under Sections 76, 78 and 80 of the Finance Act, 1994. It was held that imposition of penalty under the Act is not automatic. In order to impose penalty, the ingredients mentioned in the Section should exist and there should be absence of reasonable cause for the said failure. It is further found that even if the ingredients stipulated in Sections 76 and 78 of the Act are established, if the assessee shows reasonable cause for such failure, then the authority has no right to impose penalty in view of Section 80 of the Act. It is argued that even assuming that there is an obligation to pay service tax, in so far as the appellant has a valid case to substantiate based on the interpretation given by the appellant, it cannot be said that the appellant had evaded the liability to pay service tax and there is no ....
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....e exclusion provided under the Statute. Therefore, in order to claim the exclusion, maintenance, repair, reconditioning, overhauling etc. should be "on the" motor vehicle and not in respect of "individual parts" of motor vehicle. In this case, it is evident that the petitioner was repairing, reconditioning, overhauling parts of a motor vehicle like I.C. engines and other parts. What exactly is charged for service tax is evident from the Statute itself. It is, maintenance or repair including reconditioning or restoration or servicing of any goods or equipment. Apparently, such goods or equipment includes motor vehicles also, but, in order to give the benefit to persons involved in maintenance or repair etc. of motor vehicles, such an exclusion is granted. The word exclusion apparently means excluding any maintenance or repair relating to a motor vehicle. A motor vehicle has several parts and if only a part of the motor vehicle requires maintenance or repair, can it be said that it is not maintenance or repair of a motor vehicle? The motor vehicle in question has to be dismounted at some place either in the workshop of the appellant or in the workshop of any other person or even at t....
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....th proviso reads as Under: "73. Recovery of service tax not levied or paid or short-levied or short-paid or erroneously refunded.--(1) Where any service tax has not been levied or paid or has been short- levied or short-paid or erroneously refunded, the [Central Excise Officer] may, within one year from the relevant date, serve notice on the person chargeable with the service tax which has not been levied or paid or which has been short-levied or short-paid or the person to whom such tax refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice: Provided that where any service tax has not been levied or paid or has been short-levied or short- paid or erroneously refunded by reason of-- (a) fraud; or (b) collusion; or (c) wilful mis-statement;or (d) suppression of facts; or (e) contravention of any of the provisions of this chapter or of the rules made thereunder with intent to evade payment of service tax, by the person chargeable with the service tax or his agent, the provisions of this sub-section shall have effect, as if, for the words "one year", the words "five years" had been substituted. Exp....