2006 (5) TMI 512 - AT - Service Tax

Summary

Issues:
1. Liability to pay service tax on the use of raw materials in photographic services.
2. Liability to pay service tax on the development of processing of photographic films under the heading 'Photography Services.'

Analysis:

Issue 1: Liability for service tax on raw materials in photographic services
The appellant was required to pay service tax amounting to Rs. 41,69,972 for the use of raw materials in photographic services. The appellant's counsel argued that a similar issue had been decided in a competitor's case by the Bench in the case of Adlabs v. CCE. The learned SDR contended that the appellant had not provided details of inputs in the invoices and had not maintained proper registers, supporting the authorities' findings. The Tribunal noted that the issue was covered by the earlier ruling in Adlabs, and the appellant was directed to comply with the payment terms.

Issue 2: Liability for service tax on development of photographic films
Regarding the liability for service tax on the development of photographic films, the appellant claimed that they provided photographic services to studios that had already paid the service tax. The appellant argued that they were not liable to pay service tax as the studios had discharged the tax. The learned SDR countered by stating that the appellant failed to provide evidence of the studios' tax payments and contracts. The Tribunal found no evidence of service tax discharge by the principal studios and directed the appellant to pre-deposit Rs. 5,00,000 out of the demanded Rs. 31,04,826 within two months. The remaining amount and penalties were waived upon pre-deposit, with recovery stayed until the appeal's final hearing scheduled for August 9, 2006.

In conclusion, the Tribunal upheld the liability of the appellant to pay service tax on both issues, citing lack of evidence regarding the discharge of service tax by the studios in the second issue. The appellant was directed to comply with the payment terms and make the necessary pre-deposit to avoid further penalties and recovery actions.