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2025 (5) TMI 1454 - AT - Service TaxRate of tax or valuation of services - work contract services - monetary limits prescribed under the second proviso to Section 35B(1) of the Central Excise Act 1944 read with Section 86(7) of the Finance Act 1994 - HELD THAT - Total amount of service involved in the present appeal as per the appellant himself is Rs.66, 287/-. As per the appellant penalty is also Rs 82, 954/-. As the total amount involved in the present appeal is less than Rs.2 lakhs and as per the appellant own declaration on appeal memo issue involved is other than question relating to rate of tax or valuation I do not find that appeal need be admitted by tribunal or to be maintainable before this Tribunal in terms of second proviso to Section 35B (1) of Central Excise ACT 1944 read with Section 86 (7) of the Finance Act 1994 . Moreover there is no issue of rate of taxation or valuation of services involved in the present case. Appeal is dismissed as not admitted.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Appellate Tribunal in this appeal include:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Exemption of Services Rendered to Government Department Relevant legal framework and precedents: Section 66D of the Finance Act, 1994, defines taxable services, while various exemption notifications (No. 25/2012-ST, No. 30/2012-ST, No. 33/2012-ST) provide specific exemptions or partial exemptions for certain services. The appellant contended that services rendered to BSNL, a government department, were exempt from service tax. Court's interpretation and reasoning: The Tribunal examined the impugned order which noted that the appellant provided work contract services categorized as maintenance and repair services and original works to BSNL. It was found that these services were not exempt under Section 66D nor under Notification No. 25/2012-ST. However, the adjudicating authority had extended the benefit of Notification No. 33/2012-ST to the appellant for maintenance and repair services, resulting in partial exemption. Key evidence and findings: The appellant received Rs. 5,18,635 for maintenance and repair services and Rs. 13,80,333 for original works during the financial year 2014-15. The adjudicating authority applied Notification No. 33/2012-ST to the maintenance and repair segment but held that original works were taxable, requiring service tax payment on 40% of the amount charged as per Notification No. 30/2012-ST and Rule 2A(ii) of the Service Tax (Determination of Value) Rules, 2006. Application of law to facts: The Tribunal upheld the adjudicating authority's quantification of service tax liability, concluding that the appellant was liable to pay service tax on the original works portion and that the partial exemption granted was appropriate. Treatment of competing arguments: The appellant's claim of full exemption was rejected due to the nature of services and the applicable notifications. No exemption was found applicable to original works services. Conclusion: The appellant's services to BSNL were partially exempt, with service tax payable on original works under the specified notifications and rules. Issue 2: Quantification of Service Tax, Interest, and Penalty Relevant legal framework and precedents: Sections 73(2), 75, and 78 of the Finance Act, 1994, govern recovery of service tax dues, interest on delayed payment, and penalties respectively. Rule 2A(ii) of the Service Tax (Determination of Value) Rules, 2006, prescribes valuation for works contract services. Court's interpretation and reasoning: The adjudicating authority quantified service tax liability at Rs. 56,295 for original works services and Rs. 9,992 for other taxable services, with interest of Rs. 1,495 for delayed payment. The Tribunal found no fault in these calculations, noting the appellant failed to provide supporting documents for claimed legal and repair expenses that might have reduced taxable value. Key evidence and findings: The appellant's ST-3 returns and lack of documentary evidence for expenses were considered. The Tribunal agreed with the adjudicating authority's assessment and quantification. Application of law to facts: The Tribunal applied the statutory provisions and notifications correctly to the facts, confirming the demand for service tax, interest, and penalty. Treatment of competing arguments: The appellant's failure to produce supporting evidence weakened their position. The Tribunal rejected claims that would reduce the tax liability. Conclusion: The service tax demand, interest, and penalty as quantified by the adjudicating authority are sustainable. Issue 3: Maintainability of Appeal Before the Tribunal Relevant legal framework and precedents: The second proviso to Section 35B(1) of the Central Excise Act, 1944, empowers the Tribunal to refuse admission of appeals where the duty or penalty involved does not exceed Rs. 2 lakhs, except when issues relate to rate of duty or valuation. Section 86(7) of the Finance Act, 1994, mandates that the Tribunal exercise the same powers in service tax appeals as under the Central Excise Act. The Madras High Court decision in Roots Multiclean Ltd elucidates the Tribunal's discretion to refuse appeals below the monetary threshold unless valuation or rate of duty issues arise. Court's interpretation and reasoning: The Tribunal noted that the total service tax demand was Rs. 66,287 and penalty Rs. 82,954, both below Rs. 2 lakhs. The appellant admitted that the issues did not involve rate of tax or valuation. Therefore, the Tribunal exercised its discretion under the second proviso to Section 35B(1) to refuse admission of the appeal. Key evidence and findings: The appellant's own appeal memo disclosed the amounts involved and nature of dispute. The Tribunal relied on this disclosure and the statutory provisions. Application of law to facts: The Tribunal applied the monetary threshold and issue-type criteria strictly, concluding that the appeal was not maintainable. Treatment of competing arguments: The appellant argued that the demand was unsustainable due to differences between accrual and receipt basis accounting; however, this did not raise issues of rate or valuation. The Tribunal found this insufficient to admit the appeal. Conclusion: The appeal was dismissed as not admitted due to failure to meet the monetary and issue-type criteria for admission. 3. SIGNIFICANT HOLDINGS The Tribunal held:
Core principles established include:
Final determinations on each issue:
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