2013 (5) TMI 534 - AT - Service Tax

Retreading of old tyres - Maintenance and Repair service - benefit of Notification No. 12/2003-S.T., dated 20-6-2003 - held that - This issue is covered in favour of Revenue in 2012 (6) TMI 719 - CESTAT , whereby the Tribunal denied the benefit of the Notification No. 12/2003-S.T. in respect of retreading. Further, we find that the Larger Bench of the Tribunal in the case of Agarwal Colour Advance Photo System cited 2011 (8) TMI 291 - CESTAT, NEW DELHI (LB) , has decided against the assessee by denying the contention regarding exclusion of value of material in that case. - prima facie case is against the assessee - stay granted partly.

Summary

Issues:
- Whether the value of material used for retreading should be added to the assessable value of the service for the purpose of service tax.

Analysis:
The case involved applicants engaged in retreading old tires, facing a demand for service tax categorized under "Maintenance and Repair service." The applicants claimed exemption under Notification No. 12/2003-S.T., arguing that the value of material sold separately should not be part of the assessable value for service tax payment. They contended that they paid service tax on charges received from customers for the retreading process and showed material sale separately in invoices. However, the Revenue referred to precedents like the Safety Retreading Co. case and the Aggarwal Colour Advance Photo System case to support adding material value to the assessable value for service tax.

The Tribunal acknowledged that retreading old tires falls under the taxable category of 'Maintenance and Repair Service.' While there was no dispute on this, the key issue was whether the material value for retreading should contribute to the assessable service tax value. Referring to the precedent set in Appeal No. S/148/2008 and the decision in the Agarwal Colour Advance Photo System case, the Tribunal found in favor of the Revenue. It was noted that the Tribunal had previously denied the benefit of the Notification No. 12/2003-S.T. for retreading activities. Considering the circumstances and legal precedents, the Tribunal directed the applicants to pre-deposit a specified amount within a set timeframe, with the remaining dues waived pending appeal and recovery stayed.

In conclusion, the Tribunal ruled that the applicants were liable to pay service tax on the value of materials used for retreading old tires, as per the legal provisions and precedents cited. The decision was based on the interpretation of relevant laws and previous judgments, leading to the directive for pre-deposit and the continuation of the tax liability, with certain conditions for payment and recovery during the appeal process.