Activity Of Electroplating Amounts To Manufacture, No Service Tax Payable: CESTAT
The Chandigarh Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the activity of electroplating amounts to manufacture and no service tax is payable.The bench of S. S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) has observed that electroplating of electrical contacts by the appellant amounts to manufacture, and therefore they are not liable...
The Chandigarh Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the activity of electroplating amounts to manufacture and no service tax is payable.
The bench of S. S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) has observed that electroplating of electrical contacts by the appellant amounts to manufacture, and therefore they are not liable to pay service tax in view of the specific exclusion in the definition of business auxiliary service, which provides that if the process amounts to manufacture, no service tax would be liable to be paid.
The assessee/appellant is in the business of electroplating filter components of motor vehicles on a job-based basis for various manufacturers of auto parts. The appellant was collecting job charges and paying the applicable VAT on the materials used by them in the job. The Department was of the opinion that the activity performed by the appellants amounted to “business auxiliary service” as per Section 65(19) of the Finance Act, 1994. A show cause notice was issued to the appellants seeking to recover service tax along with interest and penalties and to appropriate service tax paid by the appellants during the period 01.12.2006 to 31.03.2007. The proposals in the Show Cause Notice were confirmed. On an appeal filed by the appellant, the Commissioner (Appeals) upheld the order of the original authority.
The assessee contended that the activity of electroplating undertaken by the appellants amounts to manufacture in terms of Section 2F of the Central Excise Act, 1944, and Section Notes to Section 16 of the Central Excise Tariff Act, 1985.
The issue raised was whether the appellants are required to pay service tax on the activity of electroplating and filter components of automobiles supplied by the manufacturers of auto parts on a job-based basis.
The tribunal held that as the activity of electroplating amounts to manufacture, no service tax is payable. The order is not sustainable and is liable to be set aside.
Counsel For Appellant: Shivang Puri
Counsel For Respondent: Shivam Syal
Case Title: Daljeet Singh Versus Commissioner of Central Excise And Service Tax, Shimla
Case No.: Service Tax Appeal No.60029 Of 2018