Custom, Excise & Service Tax Tribunal
M/S Diebold Systems Pvt. Ltd vs Commissioner Of Service Tax, Mumbai on 3 March, 2016
IN THE CUSTOMS, EXCISE AND SERVECE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. I APPEAL NO. ST/440 & 452/10-Mum APPLICATION NO. ST/CO/03/11 (Arising out of Order-in-Original No. 14/STC/BR/10-11 dated 29.06.2010 passed by the Commissioner of Central Excise, Mumbai-I.) For approval and signature: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical) =====================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : Seen of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ===================================================== M/s Diebold Systems Pvt. Ltd. Appellant Vs. Commissioner of Service Tax, Mumbai Respondent Appearance: Shri Prasad Paranjape, Advocate for Appellant Shri D. Nagvenkar, Addl. Commr. (A.R.) for Respondent CORAM: HONBLE SHRI M.V. RAVINDRAN, MEMBER (JUDICIAL) HONBLE SHRI C.J. MATHEW, MEMBER (TECHNICAL) Date of Hearing: 03.03.2016 Date of Decision: 03.03.2016 ORDER NO. Per: M.V. Ravindran:
These two appeals are directed against Order-in-Original No. 14/STC/BR/10-11 dated 29.06.2010 passed by the Commissioner of Central Excise, Mumbai-I.
2. Appeal No. ST/440/10 is filed by the Revenue while appeal No. ST/452/10 is filed by the appellant/assessee as also cross objection to Revenues appeal. Two appeals and cross objection are disposed of by a common order as the issue is interlinked.
3. The relevant facts that arises for consideration is during the period July, 2003 to 31.03.2006, Revenue authorities were of the view that the services rendered by the respondent in respect of the installation, operation and maintenance of Automated Teller Machines, will be covered for taxability under the category of Maintenance & Repair Services, "Business Auxiliary Services" and it was also noticed that the appellant assessee has not discharged the Service Tax liability in respect of Goods Transport Agency. A show-cause notice was issued to appellant demanding the differential Service Tax liability and interest thereof, also sought to impose penalties is under various Sections. The appellant assessee contested a show-cause notice on merits and also on limitation. Adjudicating authority after following due process of law upheld the demands under Maintenance & Repair Services "Business Auxiliary Services" in respect of the service rendered for Automated Teller Machines and also under the Goods Transport Agency. While imposing penalties, the adjudicating authority has imposed penalties under Section 76, 77 and 78 of the Finance Act, 1994. Revenue is seeking redressal against the Order-in-Original on the ground that penalty imposed by the adjudicating authority under Section 76 is incorrect, while appellant in contesting the entire demand and consequent implication thereof.
4. Learned Counsel would draw our attention to Section 65(9a) & (9b) of the Finance Act, 1994. He submits that the Service Tax liability in respect of ATM machines was brought into statute w.e.f. 01.05.2006 and hence no liability arises for the material period. He draws support from the decision of the Tribunal in their own case as reported at 2008 (9) STR 546 (Tri.-Chennai) and in the case of NCR Corporation India Pvt. Ltd. Vs. Bangalore 2008 (12) STR 68 (Tri.- Bang.). As regards the demand of Service Tax liability under the Goods Transport Agency, he submit that they have already discharged the said tax liability with interest but at the same time draws our attention to the agreement with the service provider as to the movement of ATM machines. It is his submission that the said agreement talks about action that needs to be undertaken by the said contractor. On specific query from the Bench he draws our attention to the clauses in the agreement.
5. Learned Departmental Representative reiterates the findings of lower authorities.
6. On perusal of the records, we find that the issue needs to be settled in this case is whether the activity of the appellant in supplying and maintenance with repairs the ATM machine are liable to be tax or otherwise.
7. On perusal of the provisions of Section 65(9a) & (9b), we find that this Section was brought into statute by Finance Act, 2006 w.e.f. 01.05.2006. The said provision clearly indicated that any services rendered in relation and respect of ATM machines are taxable from 01.05.2006. It is undisputed that the appellant had rendered the services of Installation and various services in respect of Automated Teller Machines. We find that Tribunals decision in the case of NCR Corporation India Pvt. Ltd. Vs. Bangalore (Supra) was considering the self same issue and held in favour of the assessee that services rendered in respect of Automated Teller Machines are taxable from 01.05.2006. We reproduce the ratio as is in para 6:-
6.?On a very careful consideration of the issue, we find that the issue involved is the liability of Service tax on the supply of ATM to the clients during the relevant period. Service tax was also been charged on cash replenishment and customer care under the category of Business Auxiliary Services. We find that the ATM service as a separate category of service has been introduced only with effect from 1-5-2006. The definition of ATM services is as follows:
Section 65(9b), automated teller machine operations, maintenance or management service means any service provided in relation to automated teller machines and includes site selection, contract of location, acquisition, financing, installation, certification, connection, maintenance, transaction processing, cash forecasting, replenishment, reconciliation and value-added services.
Section 65 (105)(zzzk), for the purpose of ATM [operations, maintenance or management service], taxable service means any service provided or to be provided to any person, by any other person, in relation to automated teller, machine operations, maintenance or management service, in any manner. We also find that the self same issue for the very same period was before the Tribunal in the appellants case wherein, Revenue authorities wanted to tax these services under Erection, Commission and Installation Services or under Works Contract Services. The Tribunal vide final Order dated 28.11.2007 held that the services rendered by the appellant in respect of Automated Teller Machines cannot be taxed prior to 01.05.2006. This view of the Bench in the appellant/assessee in his own case is reproduced:-
The very first requisite for levy of service tax from the assessee in respect of the works contracts executed by them during the period of dispute is lacking in the present case i.e. the taxable event. Indivisible works contracts like the ones executed by the assessee for the benefit of banks during the said period were not exigible to service tax during that period. Such events became taxable only w.e.f. 1-6-2007. It is no defence for the Revenue to say that ATMs are also equipments and, therefore, the works undertaken by the assessee for the benefit of banks were subject to service tax as service provided to a customer by a commissioning and installation agency in relation to commissioning or installation of plant, machinery or equipment. This is because ATM-related services were introduced only on 1-5-2006 for the purpose of levy of service tax. Introduction of a new entry for the purpose of levy of tax presupposes that it was not covered by any of the pre-existing entries. In other words, in the ever-widening sphere of service tax, addition of an item to the list of taxable services is just an addition, and not a subtraction from a pre-existing entry. This reality was noted by this Tribunal in the case of Glaxo Smithkline Pharmaceuticals (supra). In that case, certain service rendered by the company was found to be in the category of Business Auxiliary Service as claimed by them and not Management Consultancy Service as claimed by the Revenue. Business Auxiliary Service was introduced in July 2003 when the other service was already on the statute book. After noting that the definition of Management Consultancy Service remained the same even after introduction of Business Auxiliary Service as a taxable service, the Tribunal rejected the Revenues plea that the service provided by the assessee could still be taxed as Management Consultancy Service for the period prior to July 2003. In the present case, the assessee is also supported by the decision in Widia GMBH case. That company had transferred technology to another company for manufacture of certain tools and parts thereof and had received consideration therefor during 1993-99. The department sought to levy service tax on the amount received by the assessee from their technical collaborators, in the category of Consulting Engineers Service. The demand was contested by the assessee by submitting that the technology transfer fell within the ambit of Scientific and Technical Consultancy Service which was introduced on 16-7-2001 only. This contention was accepted by the Tribunal and it was held that, for the period 1993-99, Scientific and Technical Consultancy Service would not be taxable as Consulting Engineers Service. In other words, a service classifiable as Scientific and Technical Consultancy Service was held not to be taxed as Consulting Engineers Service for a period prior to 16-7-2001.
8. In view of the foregoing, we find that on merits the issue is now settled in favour of the appellant, and the impugned order holding the services rendered by the appellant in respect of Automated Teller Machines are taxable under any other category prior to 01.05.2006 is erroneous. Accordingly, that portion of the impugned order which confirms the Service Tax liability along with interest on this point is liable to be set aside and we do so.
9. As regards the Service Tax liability on the Goods Transport Agency, we perused the agreement entered by the appellant with various people. It talks about movement of Automated Teller Machines by paying sum, which would mean the appellant had rendered services to do with movement of Goods during the material period. In our view the appellant had no case on merits, on holistic reading of clauses of agreement, leads to inevitable conclusion that the said agreement is for movement of ATMs to various locations, and appellant is paid for such movement of ATMs. In our considered view services rendered by appellant would fall under category of Goods Transport Agency Services. According the Service Tax liability under head Goods Transport Agency along with interest is upheld.
10. As regards the penalties since we have set aside majority of the demand in respect of Automated Teller Machines, we hold there is no reason for visiting appellant with penalty in respect of Goods Transport Agency as in our view appellant could have entertained a view that the movement of ATMs is not covered under Goods Transport Agency Services. The appeal filed by the main appellant being allowed on merits partly, and penalties set aside, Revenues appeal seeking to the enhance penalty under Section 76 consequently fails, the cross objection filed by the main appellant is also disposed of.
11. The appeals are disposed of as indicated hereinabove.
(Operative portion of the order pronounced in open Court) (C.J. Mathew) (M.V. Ravindran) Member (Technical) Member (Judicial) Sp 7 APPEAL NO. ST/440 & 452/10-Mum