2013 (5) TMI 724 - AT - Service Tax

Valuation - Photography Services - cost of a material used in providing the service - extended period of limitation - held that - the issue of addition of cost of materials in providing photography services stands decided against the applicant by the Larger Bench Decision of the Tribunal in the case of Aggarwal Colour Advance Photo System Vs. CCE 2011 (8) TMI 291 - CESTAT, NEW DELHI (LB) . However we do not find any justification for imposition of penalty upon the assessee as the law was declared subsequently by the Larger Bench and the previous decisions were in favour of the assesse. As such revenue appeal is allowed partially by upholding the confirmation of demand against them. - demand confirmed - penalty waived.

Summary

Issues:
1. Disposal of appeals by revenue and assessee arising from the same impugned order.
2. Confirmation of service tax demand on the grounds of suppressed value and non-deposit of service tax.
3. Relief granted by Commissioner (appeals) on the addition of material cost but confirmation of partial demand.
4. Imposition of penalty under section 78 of the Finance Act, 1994.
5. Interpretation of assessable value based on gross value and applicability of penalty.

Analysis:
The judgment by Mrs. Archana Wadhwa of the Appellate Tribunal CESTAT NEW DELHI dealt with appeals from both the revenue and the assessee arising from the same impugned order passed by the Commissioner (appeals). The Applicant, engaged in Photography Services, faced a total service tax demand of Rs. 95,096/- for allegedly suppressing the value of service tax by not including material costs and not depositing service tax collected from customers. The Commissioner (appeals) granted relief on the material cost issue but confirmed a demand of Rs. 62,768/- due to non-deposit of service tax collected from customers. The penalty under section 78 of the Finance Act, 1994 was dropped by the Commissioner (appeals) as it was deemed to be in the knowledge of the revenue.

Regarding the revenue's appeal, the Tribunal noted that the issue of material cost had been decided against the Applicant by a Larger Bench Decision, requiring the adoption of gross value for assessable value. The Tribunal upheld the confirmation of the demand against the Applicant but found no justification for imposing a penalty, given the change in law declared subsequently by the Larger Bench. Thus, the revenue's appeal was allowed partially.

Concerning the appellant's appeal, it was observed that the appellant collected service tax from consumers on the full gross value but deposited it at a reduced value. The Tribunal agreed with the lower authority's decision to confirm the demand on the said amount, leading to the rejection of the appellant's appeal. Both appeals were disposed of accordingly, with the order being dictated and pronounced in court on 14.03.2013.