2009 (1) TMI 761 - Commissioner - Service Tax

Summary

Issues:
Appeal against Order-In-Original disallowing deduction/adjustment claimed for goods consumed in providing photography service under Notification No. 12/2003-S.T. Applicability of Notification No. 12/2003-S.T. for exemption from service tax on materials used. Reliance on case laws supporting deduction of inputs in photographic services. Challenge against penalties imposed under Sections 76, 77, and 78 of the Act.

Analysis:
The appellant, a photography service provider, filed an appeal against the Order-In-Original disallowing the deduction/adjustment claimed for goods consumed during service provision under Notification No. 12/2003-S.T. The appellant contended that they availed exemption from service tax on materials used, citing Notification No. 12/2003-S.T. They relied on case laws such as M/s. Shilpa Colour Lab and M/s. Rainbow Computer & Colour Lab, supporting the deduction of inputs in photographic services. Additionally, they challenged the penalties imposed under Sections 76, 77, and 78 of the Act.

During the hearing, the appellant's advocate presented written briefs and relevant case laws. The Commissioner analyzed the case records and submissions, noting that the appellant availed exemption under Notification No. 12/2003-S.T. However, a clarification issued by the Board stated that the exemption would not apply if goods are consumed during service provision and not available for sale. The Commissioner referenced a CESTAT decision favoring the appellant, emphasizing the exclusion of goods and materials sold to the recipient for calculating service tax, subject to documentary proof.

Based on the CESTAT decision and the Notification provisions, the Commissioner set aside the Additional Commissioner's order and allowed the appeal. The ruling highlighted the exclusion of consumed goods and materials in photography services for service tax calculation. Consequently, the penalties under Sections 76, 77, and 78 of the Act were dropped. The judgment aligned with the legal interpretations and precedents, providing relief to the appellant against the disallowed deduction and penalties.