No Service Tax under BAS and BSS on Job work of Cutting Plates /Coils: CESTAT [Read Order]

The Chandigarh bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT)held that as the job work undertaken by the appellant amounts to manufacture, service tax cannot be levied on them under both Heads “Business Auxiliary Service” and “Business Support Service. The appellants, M/s RSD Steel Industries challenged the impugned Order-in-Appeal dated passed by Commissioner (Appeals), CGST, Ludhiana. The appellants are engaged in the job work of cutting of steel coils/ plates into different dimensions; the appellants having obtained registration, discharged service tax liability on the job work done on goods that are ultimately used in the manufacture of non-excisable goods. However, they have not paid service tax on the goods that were used further in the manufacture of excisable goods; in addition to the job charges, the appellants have charged handling charges and storage charges for the coils/ plates received by them for job work; Revenue entertained an opinion that the appellants were engaged in providing “Business Auxiliary Service”, “Business Support Service” and “Renting Services” to their customers who have sent the said plates/ coils for cutting. A show-cause notice was issued seeking payment of service tax of Rs.1,14,539/- for the period 2011-12 and 2012-13. The demand raised in the show-cause notice was confirmed by Order-in-Original along with interest and penalty. On appeal, the Commissioner (Appeals) vide impugned order confirmed the demand of Rs.1,02,083/- after allowing cum-duty benefit in 2011-12 and denying the same in 2012-13 for the reason that the appellants did not give additional documentary evidence as undertaken during the personal hearing. Shri Sudhir Malhotra, Counsel for the appellant, submitted that the job work undertaken by the appellants amounts to manufacture as held by the Tribunal in the case of Jindal Stainless Steelway Ltd. – 2016 (335) ELT 57; Notification No. 06/2005 dated 01.03.2005 as amended by Notification No.08/2008-ST dated 01.03.2008 and Notification No.33/2012 have provided exemption to small-scale providers up to a limit of Rs.10 Lakhs which was not considered by the authorities below. The appellants are job-workers since they are cutting the coils/ plates of their clients according to the specifications given to them; they are collecting job charges for the same; they are discharging service tax on the coils/ plates which are ultimately used in the manufacture of non-excisable goods by their clients. They have not discharged service tax on the goods which were ultimately used in the manufacture of excisable goods which are cleared on payment of duty by their clients. Counsel for the appellants argued that the job work undertaken by them amounts to manufacture given the decision of the Tribunal in the case of Jindal Stainless Steelway Ltd. Mr P Anjani Kumar, Member (Technical) observed that “as the job-work undertaken by the appellant amounts to manufacture, service tax cannot be levied on them under both Heads “Business Auxiliary Service” and “Business Support Service”. Therefore, any discussion on other issues like cumduty price, extended period, small-scale exemption become redundant and therefore, I am not going into the other issues. Coming to the demand on handling charges and rent charged, I find that they are incidental to the job-work and it cannot be alleged that they are providing separately these services. It is not the case of the Department that the appellants are providing these services separately to different clients. Moreover, even if it is construed that the appellant is providing a bundle of services, the main service i.e. job-work of cutting plates/ coils is to be considered for levy of service tax.” While allowing the appeal, the CESTAT held that the job-work undertaken by the appellants does not attract levy of any service tax. Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates

No Service Tax under BAS and BSS on Job work of Cutting Plates /Coils: CESTAT [Read Order]

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