The Kolkata bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) reduced the demand imposed on the service tax on the repair and maintenance service rendered by the assessee on the grounds of incorrect adoption of the rate of service tax.
Mahendra Kumar Anchalia, the appellant assessee engaged in providing Works Contract Services by way of construction of Railway infrastructure such as the Erection and Commissioning of Signaling and Telecommunication system of the Railway, and also provided the above Works Contract Service on a sub-contracting basis and undertaking Maintenance or Repair Service in respect of the above services.
The assessee appealed against the order passed by the Commissioner (Appeals) for confirming the service tax demand on the works contract service of the railway and for the repair and maintenance service and for imposing the penalties under sections 77 and 78A of the Finance Act,1994.
Sushil Goel, the counsel for the assessee contended that the assessee had already paid service tax amounting to Rs.45,51,838/- along with interest thereon and the balance tax of Rs. 14.69,556/-, is not liable to pay the tax.
Also submitted that the abatement benefits as provided under Rule 2A of Service Tax (Determination of Value) Rules, 2006 had not been properly considered by the revenue department.
S. Mukhopadhyay, the counsel for the department relied on the decisions made by the lower authorities and contended that the demand calculated by the revenue was as per the law and liable to be sustained.
The Bench observed that the demand difference was mainly due to the wrong adoption of the effective rate incorrect abatement given to Goods and Transport Agency service and incorrect adoption of the rate of service tax.
The two-member bench comprising Ashok Jindal (Judicial) and Anpazhakan (Technical) reduced the service tax demand from Rs.60,21,394/- on Repair and Maintenance Service to Rs.45,51,838/-along with interest.
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