LARSEN & TOUBRO LTD. Vs. COMMISSIONER OF SERVICE TAX, BANGALORE

JUDGEMENT

(1.) THIS application seeks waiver and stay in respect of an amount of Rs. 59,43,842/ - demanded as service tax and education cess for the period from 1 -7 -2003 to 8 -7 -2004 and also the penalties imposed on the appellant. The impugned demand is under the head "Maintenance or Repair Service". After examining the records and hearing both sides, we note that the appellant was working as a commission agent of M/s. L & T Komatsu Ltd. during the material period. They were also undertaking repairs of the machines sold by the said company during the warranty period under the relevant Agreement. It is submitted by the appellant that they have been rendering "Business Auxiliary Service" from 9 -7 -2004 on a similar set of facts and paying service tax accordingly. It is submitted that, during the period of dispute, they were claiming exemption under Notification No. 13/2003 -S.T., dated 20 -6 -2003 in respect of 'Business Auxiliary Service' and hence did not have to pay service tax under the head 'Business Auxiliary Service" during that period. It is submitted that, on account of this situation, the department wanted to levy service tax on the same activity under a different head and hence the impugned demand. The learned counsel for the appellant refers to the second 'Explanation' to the definition of 'Business Auxiliary Service' given under Section 65(19) of the Finance Act, 1994 and submits that, by virtue of this 'Explanation' which has retrospective effect, the activity undertaken by the appellant was covered by the definition of 'Business Auxiliary Service' during the period of dispute as well and, therefore, the demand raised under 'Maintenance or Repair Service' is not sustainable. The learned counsel further points out that, immediately after the above exemption was lifted by the Government, the appellant got themselves registered with the department under the head 'Business Auxiliary Service' and has been paying service tax till date and that the department has not had any objection. The learned Addl. Commissioner (AR) has reiterated the findings of the learned Commissioner and has also referred to the Agreement. He has particularly referred to Articles 13, 14 & 15 of the Agreement between the appellant and M/s. L & T Komatsu Ltd. According to him, the fact that the appellant was rendering 'Repair or Maintenance Service' during the period of dispute is discernible from the above Articles of the Agreement.

(2.) AFTER giving careful consideration to the submissions, we have found prima facie case for the appellant on the strength of the 'Explanation' referred to by their counsel. This 'Explanation' reads as under: