M/s. R.K. Cylinders Vs Commissioner Of Central Tax (CESTAT Bangalore)
Going by the activity undertaken by the appellants as per the tender agreement, it is seen that he is not covered under (i) as above. Moreover, he is not a manufacturer of cylinders or he is not any person authorized by a manufacturer. It is not understood as to how the Revenue felt that the services undertaken by the appellants are covered under ‘Maintenance or Repair Service’ during the relevant period. As submitted by the appellant, the Department of Explosives have categorically declined permission for hot repairs of LPG cylinders as he was not a manufacturer. Therefore, the appellants cannot be held to be undertaking the services chargeable under ‘Maintenance and Repair Service’ as an agent of manufacture also. It is found as per tender that the repainting, etc., undertaken by the appellants is to maintain the colour coding required for the maintenance of standards of safety as categorically brought out in para 15.0, 15.1 and 18.0 in the terms and conditions of the tender. Therefore, it appears that they are not covered by clause (ii) also.
FULL TEXT OF THE CESTAT JUDGMENT
M/s. R. K. Cylinders, the appellants, are engaged in the business of testing of LPG cylinders which includes activities of segregation of cylinders, statutory inspection hydro testing, pneumatic testing. They also undertake surface preparation, repainting, punching and stenciling of details of logos of their clients and returning these to various oil companies. The Department initially issued a show-cause notice dated 29.12.2005 demanding service tax on the activities of restoration and painting under the heading ‘Technical Testing and Analysis Services’ alleging undervaluation. A show-cause notice was dropped. Then, the Joint Commissioner of Service Tax issued show-cause notice dated 30.1.2006 demanding service tax on the activity of restoration and painting of cylinders and affixing logo on cylinders under the heading ‘Maintenance and Repair Service’. However, the Joint Commissioner has dropped the proceedings.
2. The Commissioner of Service Tax, Bangalore, in exercise of powers under Section 84(1) of the Finance Act, 1994 issued two show-cause notices dated 24.12.2008 and 20.2.009 demanding an amount of Rs.5,23,322/- and Rs.60,087/- as service tax on the ground that the activities of surface preparation, repainting cylinders, bunching of stenciling of details and stenciling of logo, etc., is covered under the heading ‘Maintenance and Repair Service’. Commissioner vide Orders-in-Review No.18/2009 dated 18.3.2009 and No.01/2009 dated 9.1.2009 confirmed the demands raised therein with interest and penalty. Hence, these appeals.
3. The learned counsel for the appellants has submitted that painting is a ‘works contract’ and appellants have already discharged service tax/VAT on the activity of painting; therefore, the question of levy of service tax on the same would not arise at all. It is only with effect from 1.6.2007 the works contract services are made liable to service tax. He relied upon decision rendered in the case of Larsen & Toubro Ltd.: 2015 (39) STR 913 (SC).
3.1 He also submitted that the heading ‘Maintenance or Repair Services’, during the relevant period does not include reconditioning or restoration of goods, which was inserted only from 16.6.2005. He relied upon CBEC Circular No.B1/6/2005-TRU dated 27.7.2005 and Sharda Udyog vs. CCE: 2015 (39) STR 1036 (Tri.-Del.).
3.2 The counsel further contended that work order for testing cylinders and painting or repainting the same is not an maintenance contract and therefore, the activity does not get covered under the heading ‘Maintenance and Repair Service’ during the relevant period. He relied upon the following decision:
