Custom, Excise & Service Tax Tribunal
M/S. Highway Tyres Pvt. Ltd vs C.C.E.&S.T., Chandigarh-I on 27 October, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL R.K. PURAM, WEST BLOCK NO.2, NEW DELHI-110066 COURT NO. I Date of hearing: 27.10.2015 Service Tax Misc. Application No. 52131/2015 Service Tax Appeal Nos. ST/60245-60248/2013 [Arising out of Order-in-Appeal No. LUD-EXCUS-000-APR-436-(439)-13-14 dated 14/08/2013 passed by The Commissioner (AppealS) Custom & Central Excise, Chandigarh-I] For Approval and Signature: Honble Mr. Justice G. Raghuram, President Honble Shri C.J., Mathew, Member (Technical) 1. Whether Press Reporter may be allowed to see the Order for Publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy of the order? 4. Whether order is to be circulated to the Department Authorities? M/s. Highway Tyres Pvt. Ltd. Appellant Vs. C.C.E.&S.T., Chandigarh-I Respondent
Appearance: Dr. Navin Rattan, Advocate and Ms. K. Sharma for the appellant Shri Amresh Jain, DR for the respondent.
Coram: Honble Mr. Justice G. Raghuram, President Honble Shri C.J., Mathew, Member (Technical) Final Order Nos. 53383-53386/2015 Per: C.J. Mathew The appellant, M/s Highway Tyres, has filed ST/Misc/52131/2015 in main appeal ST/60245/2013 seeking early hearing. In accordance with direction of order of Honble High Court of Punjab & Haryana dated 20th May 2014 in STA No 11/2014 for expeditious disposal and the advanced years of the directors of the appellant company, the appeal is taken up for disposal today. Three other pending appeals, ST/60246/2013, ST/60247/2013 and ST/60248/2013,are also taken up for disposal.
2. The appeal relates to the question of leviability of service tax on the business of the appellant viz. "retreading of tyres. Revenue asserts that the activity does not amount to manufacture and is, in fact, rendition of management. maintenance and repair service. Accordingly, the impugned order-in-appeal no LUD-EXCUS-000-APP-436-439- 13-14 dated 29th July 2013 of Commissioner of Central Excise & Customs, Chandigarh I, disposing of four orders of the original authority have upheld the demands amounting to Rs 19,06,545 besides interest thereon and penalties under section 77 and 78 of Finance Act, 1994. All four appeals, are taken up for disposal together.
3. The appellant is in the business of retreading of tyres of motor vehicles by affixing replacement compounds on the worn-out portions of tyres and thus rendering them fit for continued use for a spell. According to them, the activity does not come within the ambit of service tax even though Revenue seeks to categorise them as providers of maintenance and repair service taxable under section 65(105)(zzg) of Finance Act, 1994 with the activity defined under section 65(64) of Finance Act, 1994.
4. Learned Counsel for appellant has argued that the definition in section 65(64) comprises two parts and that, of these, the latter is restricted to manufacturer or person authorized by a manufacturer which the appellant is not. He further contends that the first part requires the existence of a contract or agreement for any maintenance or repair to be liable to tax and went on to argue that the activity intended to be covered by the definition of taxable service did not apply to discrete transactions of multiple beneficiaries occurring in the tyre retreading business. Learned Authorized Representative vehemently opposed these claims indicating that the original authority had found that the appellant was indeed a manufacturer of tyres and, therefore, well within the ambit of taxability in the matter of retreading of tyres which is essentially repair old tyres. On behalf of appellant, this finding was disputed.
5. Without going into the aspect of whether the appellant is a manufacturer or not, we observe that the first appellate authority has, in the order impugned before us, noted that taxability of the said service had, between its introduction on 1st July 2003 and amendment on 16th June 2005, been restricted to such maintenance or repairs as were performed in accordance with an maintenance contract but which thereafter was not restricted by such a condition. Thereby, the status of the appellant as manufacturer is not relevant to determine taxability.
6. A perusal of the Indian Contract Act, 1872 would show that a contract is not required to be in writing. At the same time, the existence of offer, acceptance, performance and consideration is sufficient to render even the most simple and rudimentary transaction to be a contract. The activity of retreading is an activity of repair for maintenance of used tyres and, considering the ingredients of the transaction, would fall well within the ambit of section 65(64)(i). Accordingly, we uphold the contention of Revenue that the activity of the appellant is taxable under Finance Act, 1994.
7. Learned Counsel for appellant contends that the activity of retreading includes use of raw materials which are sold to the recipient of the service and that VAT obligations have been discharged on these goods to the Commercial Taxes Department of the state. Appellant has furnished the details of value of materials along with the details of the bills. Goods on which VAT has been discharged are not liable to be subject to tax again under Finance Act, 1994 by inclusion in value of taxable services. The tax amount due on the service component thereon will require to be computed.
8. Accordingly, we set aside the demand of tax in the impugned orders and direct the original authority to re-compute the tax due after taking into account the goods on which VAT liability has been discharged. Appellant is also liable to remit interest thereon. Given the confusion that appears to have prevailed in the matter of taxation of tyre retreading, we are inclined to invoke the provisions of section 80 of Finance Act, 1994 and set aside the penalties in the impugned order.
[Operative portion of the order has already been pronounced in the open court.] (Justice G Raghuram) President (C.J.Mathew) Member (Technical) Ritu -5-