2011 (12) TMI 372 - AT - Service Tax

Inclusion of consumables used in course of servicing of cars and the parts used for replacement to the assessable value of the Authorized Servicing Station service for charging service tax - Disallowance of Cenvat credit on repair and maintenance services used in the course of servicing of cars assessee pleaded that parts and consumables used for servicing of the vehicles had actually been sold by the Appellant on which VAT has been paid their value cannot be included in the value of the servicing of cars pre-deposit of service tax demand, Cenvat credit demand, interest and penalty may be waived - Held that - As in line with the decision of the Larger Bench in the case of Aggarwal Colour Advance Photo System v. CCE (2011 - TMI - 205988 - CESTAT, NEW DELHI LB ) the value of the goods used for providing a service is to be included in the value of the service - Appellant have not been able to give the break-up of total value of the goods used into the value of consumable and the value of spare parts - unable to show as to whether the services in respect of which the Cenvat credit had been taken, had been exclusively used in the service station - deposit an amount of Rs. 40 Lakh within a period of 8 weeks from the date of the order - decided against the assessee

Summary

Issues:
1. Inclusion of consumables and replacement parts in the assessable value for service tax.
2. Eligibility of repair and maintenance services for Cenvat credit.

Analysis:
1. The first issue in this case revolves around whether the value of consumables and replacement parts used in servicing cars should be included in the assessable value for charging service tax. The Appellants, who are dealers of vehicles manufactured by a specific company and also operate as an authorized service station, contested the inclusion of consumables and replacement parts in the assessable value. The Commissioner had confirmed a service tax demand of Rs. 71,36,540 along with interest, based on the inclusion of these items. The Appellants argued that the consumables and parts had been sold separately with VAT paid, and thus should not be part of the service value. However, the Tribunal found that while spare parts with VAT paid may not be included, the Appellants failed to provide a breakdown of the total value of goods used. As a result, the Tribunal directed the Appellants to deposit Rs. 40 Lakh within 8 weeks, with the remaining amount waived pending appeal.

2. The second issue pertains to the eligibility of repair and maintenance services for Cenvat credit. The Commissioner disallowed a Cenvat credit of Rs. 11 Lakh related to these services, which the Appellants contested. The Appellants argued that the Cenvat credit had been paid on services used during car servicing and requested a waiver of the pre-deposit requirement for the appeal. The Departmental Representative opposed this, citing a Tribunal decision and lack of evidence showing exclusive use of services at the Appellant's branch. The Tribunal noted that the Appellants failed to demonstrate exclusive use of the services for Cenvat credit and directed them to deposit Rs. 40 Lakh within a specified period, with the remaining amount waived pending appeal.

In conclusion, the judgment addressed the issues of including consumables and replacement parts in the assessable value for service tax and the eligibility of repair and maintenance services for Cenvat credit. The Tribunal directed the Appellants to deposit a specified amount within a set timeframe, while waiving the remaining sum pending appeal, due to the lack of evidence and failure to demonstrate exclusive use of services for Cenvat credit.