The Chennai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) directed re-adjudication to the department for imposing service tax demand on technical testing and analysis services without examining the nature of the services rendered by the assessee.
C. Manikanteswaran, the appellant assessee was a proprietorship concern owned by C. Manikanteswaran and the nature of service rendered by the assessee revealed that customers of the assessee are mainly manufacturers/fabricators of various items such as boiler parts, plant and machinery, pipeline, etc. Such customers had issued work orders/purchases orders to the appellant. As per these work orders/purchase orders, the assessee was required to carry out the Heat Treatment or Stress relieving on the welded joints of the products manufactured/fabricated by their customers.
The assessee appealed against the order passed by the Commissioner (Appeals) for confirming the demand for the Service Tax under ‘Technical Testing and Analysis Services’ for the period from 01.10.2006 to 01.09.2011 along with interest and for imposing penalties.
J. Ragini, the counsel for the assessee contended that the Department had not been able to establish how the activity of the assessee would fall within the definition of ‘Technical Testing and Analysis Services’ as defined under Clause 106 of Section 65 of Chapter V of the Finance Act, 1994.
Also submitted that the assessee was only doing a process incidental to manufacture and was not doing activity falling within the definition of ‘Technical Testing and Analysis Services’ and the work done by the assessee was called Postweld heat treatment (PWHT) / stress relief heat treatment.
N. Sathyanarayanan, the counsel for the department relied on the decisions made by the lowest authorities and contended that the service undertaken by the assessee was nothing but testing of the welded joints and therefore was not an incidental activity to manufacture and the assessee also issues test certificate after carrying out the heat treatment test and the demand had been correctly confirmed by the authorities.
The Bench observed that the department raised the demand for service tax without enquiring about the right nature of the services rendered by the assessee.
The two-member bench comprising Sulekha Beevi (Judicial) and Vasa Seshagiri Rao (Technical) remanded the matter to the adjudicating authority for fresh consideration.
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