TMI Blog2018 (4) TMI 908X X X X Extracts X X X X X X X X Extracts X X X X ..... N NO. ST/STAY/52950/2014 in APPEAL NO. ST/52480/2014 - Interim Order : 4 of 2018 STAY ORDER NO. 60127/2018 - Dated:- 26-3-2018 - Mr. Ashok Jindal, Member (Judicial) and Mr. Devender Singh, Member (Technical) Present for the Appellant(s): Sh. B. L. Narsimhan, Advocate Present for the Respondent(s): Sh. G. M. Sharma, A.R. ORDER Per : Devender Singh The appellants are registered with the Service Tax Department, Gurgaon for rendering of various taxable services. An audit of their records was conducted in August 2012 for the period 2009-10 to 2011-12. During the audit, it was found that the appellants were not paying service tax on Optional Extended Warranty Service under Motor Repair Related Service from 01.05.2011 to 30.06.2012. This service was in continuation to the normal warranty period of two years and was provided for third year or third or fourth year for which the appellants charged the separate fee from the ultimate customers. The Extended Warranty Policy was sold by them to their customers through their dealers. The dealers collected the amount for extended warranty from the customers on behalf of the appellants and remitted the same to the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance, the activity on repair is a one time activity, whereas there is a continuous contract under Extended Warranty Scheme to provide repair/replacement service free of cost as many numbers of time as required. He pointed out that the Ld. Commissioner has incorrectly confirmed the demand of service tax on the ground that it was service provided/ to be provided, which refers to such a situation, where the service provider had received an amount in advance to provide service on the certain date in future where in their case, the situation was such that the repair/replacement may or may not happen. Other argument was that the entry 65(105)(zzzza) did not cover their activity as it did not fall in the one of the purposes listed before 01.07.2012. He informed that post 01.07.2012, they were paying the service tax on this activity. He relied upon the following judgments:- (i) Digital Satellite Warranty Cover Ltd. vs. Financial Service Authority 2013 UK SC 7 (ii) CCE Cus, Kerala vs. M/s Larsen Tourbo Ltd 2015- TIOL-187-SC-ST (iii) Hindustan Engineering vs. CST 2017-TIOL-2166-CESTATDEL. (iv) Hindustan Aeronautics Ltd. vs. CST 2017-TIOL-3591-CESTAT-BANG. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efect is attributable to faulty material or workmanship at the time of manufacture. This repair/replacement service is provided through the dealer, who charge the cost of labour and replace parts from MSIL/MUL and pay service tax on labour cost only. The definition of repairing, reconditioning, restoration or decoration or similar activities of motor vehicle in terms of Section 65(105)(zo) of the Finance Act, 1994 is as under :- taxable service means any service provided or to be provided to any person, by any other persons, in relation to any service for repair, reconditioning, restoration or decoration or similar services of any motor vehicle other than three-wheeled scooter auto rickshaw and motor vehicles meant for goods carriage. Relevant part of the extended warranty contract (EWC) is as below: TERMS AND CONDITIONS This is a mechanical and electrical breakdown warranty designed to assist towards the cost of repairs/replacement of any parts covered in this document. We accept the responsibility of repair/replacement only as per the terms and conditions of this document. QUALIFICATION a) The Maruti vehicle must be delivered by Maruti authorized dea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ken before the Ld. Commissioner nor has it been taken in the pleadings in the appeal filed by the appellants. Besides, the breakup of the replacement and the repair portions are not coming out from the record. Hence this contention of the appellants being a mixed question of fact and law will need to be examined at the stage of the final hearing. 6.4 The appellants have relied on the case of Digital Satellite Warranty Cover Ltd. (supra) of U.K. Supreme Court. We find that the said case law is in the context of the Financial Services and Market Act (Regulated Activities) Order 2001 of U.K. and is not in the context of the Finance Act, 1994. The law and jurisprudence of the two acts being different, the same cannot be relied on to interpret the provisions of the Finance Act, 1994. As for the other case laws cited by the appellants in support of their claim that it should be considered as work contract as mentioned above, as explained earlier, this contention is a mixed question of fact and law, which has to be examined in detail at the stage of final hearing. 6.5 The appellants have also pleaded on the issue of limitation. The issue is a debatable issue involving question of la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Board‟s Circular 334/4/2006- TRU dt. 28.02.2006, wherein it clarifies that it should be an activity which is outsourced. We also find support from the findings of this Tribunal in the case of Air Liquide North India (P) Ltd vs. CCE, Jaipur 2012 (27) STR 295 (Tri. Del.), wherein the Tribunal held as under: 5.3 We are of prima facie view that the ratio of the above mentioned judgment of the Apex Court is applicable to this case, and therefore, the expression Services in relation to business or commerce in the definition of support service, of business or commerce in section 65(104c) would get its colour from the inclusive portion of the definition. On this basis we are of prima facie view that the expression support service of business or commerce would cover only the services of supporting nature for the main business - manufacture, trading or services - like services relating to marketing, customer relationship, distribution and logistics, accounting and transaction processing, office infrastructure, etc. and would not include service of renting of machinery and equipment for production or manufacture which being services relating to manufacturing activity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mixed question of fact and law will need to be examined at the stage of the final hearing. I find that ld. Brother has not disputed the fact that the Repair has been done through replacement of parts and it has been admitted that the cost of parts and content of labour cannot be vivisected. Therefore, in terms of decision of the Hon ble Apex Court in the case of Larsen Toubro Limited (supra), the services rendered by the appellant merits classification under Works Contract service . Therefore, prima-facie, the appellant is not liable to pay service tax under the category of Repair and Maintenance Services , as ld. Member (Technical) himself has observed that the dealers are paying service tax on the labour cost and for replacement of parts, they raised invoices on the appellant. 13. In view of the above observations, for the services rendered by the appellant of Optional Extended Warranty service, the appellant has made out a case for complete waiver of pre-deposit. Accordingly, I waive the requirement of pre-deposit of entire amount of service tax along with interest and penalty and stay recovery thereof during the pendency of appeal. Ashok Jindal Member (Judici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rival contentions. I find that the transaction entered into between the purchaser of motor vehicle and the manufacturing appellant in case of extended warranty is that the money is collected irrespective of whether the vehicle is attended or not and this is how it is different than the service for repair, reconditioning, restoration or decoration of the motor vehicle because in the case of repair, reconditioning etc. the monitory consideration is received by the service provider only after attending on the job of repair reconditioning etc. Therefore, in my opinion the matter is debatable. I, therefore, do not agree with Brother Member (Technical) that a pre-deposit of 10 per cent of service tax demanded needs to be paid by the appellant under section 35F of Central excise Act, 1944. In result, I agree with Brother Member (Judicial) in so far as dispensing with any Pre-deposit. 18. With the said option, the file is returned to division Bench. (Anil G. Shakkarwar) Member (Technical) MAJORITY ORDER In view of the majority decision the appellant-applicant is not required to make a pre-deposit of 10% of service tax demanded, under Section 35F of Central Excise Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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