Refurbishing of Cranes Falls Under MMR Services, Not Motor Vehicles: CESTAT Quashes Demand on Limitation [Read Order]

The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that refurbishing of cranes falls within the scope of Management, Maintenance or Repair (MMR) services and not under motor vehicles but the demand for service tax was quashed as it was barred by limitation.

Sugesan Warehousing Pvt. Ltd., the appellant, was registered for providing “supply of tangible goods service.” During the audit, it was observed that the appellant had also earned income from refurbishing cranes during April 2008 to March 2012.

The department argued that such activity amounted to MMR services and issued a show cause notice demanding service tax along with interest and penalties.

The adjudicating authority confirmed the demand, and on appeal, the Commissioner (Appeals) upheld the demand, interest, and penalty under Section 78 of the Finance Act, 1994, while setting aside the penalty under Section 77. The appellant then approached the CESTAT.

The appellant’s counsel argued that the activity of refurbishing cranes was excluded from MMR services since motor vehicles were specifically exempted under Section 65(64) of the Finance Act.

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They submitted that mobile cranes qualify as motor vehicles under the Motor Vehicles Act, 1988 and explained that since the cranes are treated as motor vehicles, no service tax was payable under MMR services.

The revenue counsel argued that the appellant itself admitted that the refurbished cranes were not registrable with the Regional Transport Office (RTO) and thus could not be treated as motor vehicles. They pointed out that but for the audit, the evasion would not have come to light and defended the invocation of the extended period of limitation.

The two-member bench comprising Ajayan T.V. (Judicial Member) and Vasa Seshagiri Rao (Technical Member) observed that the appellant, in its reply, had clearly admitted that the cranes refurbished were not registrable with the RTO.

On this basis, the tribunal held that the activity fell within MMR services and not under motor vehicles. It also observed that the show cause notice issued in 2013 covered the period 2007 to 2012 and there was no evidence of wilful suppression or intent to evade payment of service tax.

Relying on Supreme Court judgments in Anand Nishikawa Co. Ltd. v. CCE and Pushpam Pharmaceuticals v. CCE, the tribunal held that extended limitations could not be applied.

The tribunal explained that without evidence of deliberate misstatement, the extended period of limitation was unsustainable. It further observed that the appellant had submitted evidence of payment of interest on delayed tax, which was not properly examined by the lower authorities.

The tribunal set aside the demand of service tax, interest, and penalties, and the appeal was allowed with consequential relief.

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