Activity of Installing Fixed facilities as part of Main Activity would not Constitute Business Support Services, No Service Tax: CESTAT [Read Order]

While quashing an order demanding service tax against Goyal MG Gases Private Limited, the CESTAT, Kolkata bench has held that an activity of installing fixed facilities as part of the main activity of the appellant would not constitute “Business Auxiliiary Services” within the meaning of the Finance Act, 1994.

The Appellant is engaged in the manufacture of Oxygen and argon gases for various iron and steel manufacturers across India. The appellant-assessee is engaged in the manufacture and sale of oxygen gases. They have entered into agreement with customer/buyer for sale of such industrial gases and as per the agreement the Appellant assessee have to ensure uninterrupted supply of gas in the factory of the customer/buyer for which they have installed fixed facilities in the premise of customer/buyer.

Considering the above fact, the Tribunal bench comprising Shri P.K.Choudhary, Member(Judicial) and  Shri Raju, Member(Technical) observed that “Thus in the present case the Appellantassessee has not undertaken any service activity for the customer/buyer by installing fixed facilities. Therefore, no question of outsourcing of any activity by the customer/buyer to the Appellantassessee arises in this case. Thus, charges received by the Appellant-assessee in respect of fixed facility are outside the preview of the Business Support Services.”

Quashing the service tax demand, the Two-Member bench further held that “We find that to fall within the ambit of Business Support Services it is essential that activity should be supportive to the main activity undertaken by the client. Where as in the present case, the activity of installing and maintaining fixed facility undertaken by the Appellant-assessee for supplying oxygen gas manufactured by it to the buyer/client. Thus, in this case the fixed facility installed by the Appellant-assessee is used by the Appellant-assessee itself and it is in no way construed as supporting activity for the buyer/client of the Appellant-assessee. Given this, fixed charges received by the Appellant-assessee from the buyer/client cease to fall within the ambit of business support services. Therefore, demand of service tax confirmed by the Ld. Adjudicating Authority is not sustainable and is liable to be set aside.”

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