2013 (11) TMI 457 - AT - Service Tax

Valuation - benefit of notification no. 12/2003 - goods sold - Erection, installation and maintenance services - Waiver of pre deposit - Held that - appellant has been taking a plea from the beginning that they had supplied hydraulic machinery on which applicable VAT has been paid and separate bills have been raised. - benenfit of Notification No.12/2006-, prima facie, cannot be denied to the appellant as the said notification talks about extending or deducting the value of goods from the gross value of services, which are charged for by the service provider to the recipient of services. - stay granted.

Summary

Issues:
Service Tax liability on supply of machinery and reimbursement expenses.

Analysis:
The appellant filed a Stay Petition seeking waiver of Service Tax, interest, and penalties. The lower authorities confirmed the amounts due, alleging the appellant underpaid Service Tax by dissecting the contract for material supply under erection, installation, and maintenance services. The Chartered Accountant argued that the Service Tax liability was in question concerning machinery supply and reimbursement expenses. He contended that the appellant supplied machinery to M/s L&T, billed separately with applicable VAT, and filed VAT returns. Citing Notification No.12/2003, he claimed eligibility for benefits not extended. Referring to a Delhi High Court case, he argued against including reimbursement charges in gross value for Service Tax discharge, as Rule 5(1) of Service Tax Valuation Rules was deemed ultra vires.

The Tribunal heard both parties and reviewed the evidence. They acknowledged the appellant's stance on supplying machinery with paid VAT and separate billing to M/s L&T. They noted the appellant's argument against including reimbursement charges in gross value for Service Tax discharge. Referring to Notification No.12/2006, the Tribunal found merit in the appellant's contentions, indicating evidence of machinery sale to M/s L&T. They agreed with the Chartered Accountant's assertion that the Delhi High Court invalidated provisions concerning reimbursement charges for Service Tax valuation. Consequently, the Tribunal granted the appellant's request for waiver of pre-deposit, staying recovery until appeal disposal.