The CESTAT, Delhi, in M/s Stallion Rubbers Limited v. CCE, Jaipur, held that no service tax can be levied on the activity of retreading of old tyres under the head “Maintenance or Repair” since the same is taxable under the head “reconditioning and restoration” only after amendment w.e.f 16.06.2005.
In the instant case, the appellant-Company engaged in retreading of old tyres in terms of an agreement with Ministry of Defence. The Revenue demanded service tax on the said activity under the head “Maintenance and Repair service” for the period 01.07.2003 to 16.03.2005.
Before the Tribunal, the appellants relied on the decision in Speedways Tyres and Balwinder Singh, wherein a similar issue was concluded in favor of the assessee.
Relying on the said decisions, the Appellate Tribunal held that for the period prior to 16.06.2005, the activity of retreading of tyres restore the tyres to its functional form and the same will not come under the category of “Maintenance or Repair”.
Quashing the demand on the appellants, the bench added that “The amendment carried out in tax entry w.e.f. 16.06.2005 brought in the tax liability for the activity of “reconditioning and restoration”. The appellant is discharging service tax after such amendment in the tax entry. The Tribunal in the above decisions held that prior to amendment retreading activities cannot be taxed under “Management and Maintenance” service.”