2023 (9) TMI 721

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....nt are mainly manufacturers/fabricators of various items such as boiler parts, plant and machinery, pipe line, etc.,. Such customers have issued work orders / purchase orders to the appellant. As per these work orders / purchase orders, the appellant is required to carry out the Heat Treatment or Stress relieving on the welded joints of the products manufactured / fabricated by their customers. On verification, it was ascertained that the appellant was engaged by their customers for the purpose of testing and analyzing the quality and fitness of the welded areas on the joints of the products fabricated before such manufactured / fabricated items are sold or taken for further use in manufacture / fabrication activity. It therefore appeared to the Department that the services provided by the appellant was in the nature of technical testing and analysis of the quality of welding done on the fabricated items as the case may be. 2. It was also noted that after testing of the welded joints, the appellant was required to issue a testing report to their customers. From the copies of the invoices issued by the appellant, it was seen that the test report No. in respect of each customer wa....

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....nance Act, 1994. The appellant Shri C. Manikanteswaran who is a layman stated before the officers that they test the quality and fitness of the welded joints and give the test report to their customers. Solely based on this statement, the Show Cause Notice has been issued. In fact, the appellant is only doing a process incidental to manufacture and is not doing activity falling within the definition of „Technical Testing and Analysis Services‟. The work done by the appellant is called Postweld heat treatment / stress relief heat treatment. It is generally known as 'PWHT'. As per website, the said activity is explained as under:- 3.2 The Ld. counsel explained that it is a method for reducing and redistributing the residual stresses in the material that have been introduced by welding. It has nothing to do with Technical Testing and Analysis Services. The appellant does not issue any report certifying quality of goods. The job description in the invoices is 'localised pwht of piping product'. It is heat treatment after welding and is often used to improve the properties of weldment. As per technical data, the post heat treatment is used to minimize the ....

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....finition of „Technical Testing and Analysis Services‟. The definition of the service under Section 65(105)(zzn) of the Finance Act, 1944 is as under:- "technical testing and analysis" means any service in relation to physical, chemical, biological or any other scientific testing or analysis of goods or material or information technology software or any immovable property, but does not include any testing or analysis service provided in relation to human beings or animals." 6.2 This taxable service which was introduced with effect from 01.07.2003 as per Section 65 (106) of the Finance Act, 1944 provides that "taxable service means any service provided or to the provided to any person by a technical testing and analysis agency in relation to technical testing and analysis". 6.3 Section 65(107) states that „technical testing and analysis agency‟ means „any agency or person engaged in providing services in relation to technical testing and analysis‟. 6.4 The authorities below have mainly relied upon by the statement given by Shri C. Manikanteswaran to conclude that the activity carried out by him is technical testing. It is correct ....

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....testing, it is now argued by the Ld. counsel that the activity under taken by the appellant is not technical testing and is only part of manufacturing activity. The word „testing‟ is used by him in an unprofessional sense. The work orders do not show that the appellant has been entrusted with the job of technical testing. Instead, the job description says „localised PWHT of piping product‟. The job work is explained as under:- 6.6 The activity under taken by the appellant as per the above work order does not indicate any activity of technical testing. It is in the nature of heat treatment, stress relief treatment, etc. For an activity to fall under technical testing, some process so as to test the quality, strength, toughness, etc., has to be done. 6.7 The Ld. counsel for the appellant has produced details from the website to explain that PWHT is an heat treatment which is essential after welding process. It is seen that PWHT is done in order to maintain or improve material strength and mechanical properties and to relieve residual stress. In steel fabrication, the most common PWHT procedures applied are post heating and stress relieving. It is explain....

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....ct Service Tax only on producing documents that he has already paid Service Tax. The appellant has taken Service Tax Registration on 27.02.2012. The work orders prior to this date do not indicate collection Service Tax. However, this fact has to be re-examined. 7.2 Again, from the statement given by Shri C. Manikanteswaran as reproduced above that the amount received from the customers included transportation charges. If the amount includes actual reimbursements in the nature of transportation charges, such expenses cannot be included in the taxable value as per the decision of the Hon‟ble Supreme Court in the case of Union of India Vs. Intercontinental Consultants and Technocrats Pvt. Ltd. [2018 (10) GSTL 401 (SC)]. This issue as to whether taxable value quantified by the Department includes reimbursable expenses also have to be examined. 8. From the foregoing discussions, we find that it is fit case for remand to the adjudicating authority who is directed to consider all issues discussed above afresh. We therefore remand the matter leaving all issues open. 9. In the result, the impugned order is set aside. The matter is remanded to the adjudicating authority for fr....