2014 (3) TMI 190 - AT - Service Tax

Waiver of predeposit - Valuation - inclusion of value of materials used in repair work - Held that - the applicant satisfied all the conditions of Notification No.12/2003-ST, since Revenue has not come in appeal against the finding given by the Commissioner. In the previous case of the same assessee 2013 (11) TMI 641 - CESTAT CHENNAI for a different unit, we called for pre-deposit of about 10% because the applicant did not produce documents to justify submissions before the lower adjudicating authority. In the instant case, no such observation is seen in the adjudication order. - stay granted.

Summary

Issues:

1. Whether the applicant should have included the value of materials used in repair work for paying service tax.
2. Interpretation of Notification No.12/2003 regarding exemption of value of goods sold to the service recipient from service tax.
3. Validity of Rule 5 of Service Tax (Determination of Value) Rules, 2006.
4. Justification for waiver of pre-deposit of dues arising from the impugned order for admission of appeal.

Analysis:

1. The applicant, engaged in maintenance and repair of freight containers, charged repair charges and the cost of materials used. The Revenue contended that the value of materials should have been included in the service value for paying service tax. A Show Cause Notice was issued for service tax short-paid. The adjudication confirmed a service tax demand of Rs.1,29,88,618/- along with interest and penalty. The applicant appealed, seeking waiver of pre-deposit for admission of the appeal.

2. The advocate for the applicant argued that all conditions of Notification No.12/2003 were met, exempting the value of goods sold to the service recipient from service tax. He highlighted that the adjudication officer should have granted such exemption. The Revenue relied on Rule 5 of Service Tax (Determination of Value) Rules, 2006, which the advocate claimed had been struck down by the Delhi High Court. The Tribunal found that the applicant satisfied the conditions of the notification and waived the pre-deposit for admission of the appeal.

3. The Revenue's representative opposed the waiver, citing a previous case where pre-deposit was requested. He pointed out that no VAT was paid on the goods shown to be sold, implying no sale of materials. The advocate clarified that VAT was shown as 'zero' due to the goods being exported. The Tribunal considered both arguments, noting that the Revenue did not appeal against the Commissioner's finding that the applicant met the conditions of Notification No.12/2003. Therefore, the Tribunal waived the pre-deposit for admission of the appeal.

4. The Tribunal's decision was based on the satisfaction of the conditions of the notification by the applicant, leading to the waiver of pre-deposit for admission of the appeal and a stay on the collection of dues pending the appeal. The Tribunal differentiated the current case from a previous one where pre-deposit was requested, emphasizing the lack of observations in the adjudication order regarding document submission. The Tribunal's decision was in favor of the applicant, granting relief based on the interpretation of the relevant notification and rules.