2015 (1) TMI 597 - AT - Service Tax

Authorized service station service - Valuation of service - inclusion of value of parts - Demand of differential duty - Held that - Appellant is authorized service station which sell parts of the vehicle as well as provide service station which sell parts of the vehicle as well as provide service of repairs maintenance of the vehicle. - sale of parts have been shown separately on which VAT has been discharged at applicable rates and service portion of the service provided has also shown separately and paid service tax thereon. Therefore the case of the appellant is squarely covered by the CBEC Circular No. 96/7/2007 dt. 23.8.2007 when VAT has been paid on the material supplied they are not required to pay service tax. In these circumstances we hold that the value of parts supplied is not includible in the value of taxable service. Appellant is authorized service station of M/s. Tata Motors and required to repair and maintain vehicles of Tata Motors. If the appellant has undertaken the repairs and maintenance activity of the other manufacturer the same is not includible in the taxable service as held by this Tribunal in the case of Commissioner of Central Excise Chandigarh Vs. Dynamic Motors reported in 2011 (11) TMI 308 - CESTAT NEW DELHI . In these circumstances we do not find any merit in the impugned order and the same is set aside - Decided in favour of assessee.

Summary

Issues:
1. Demand of service tax on valuation of taxable service under the category of authorized service station.
2. Inclusion of value of goods supplied in the taxable value of service provided.

Analysis:
1. The appellant, an authorized service station of a vehicle manufacturer, appealed against an order demanding service tax due to alleged undervaluation of taxable service. The appellant argued that repairs for vehicles of other makes were not subject to service tax as per CBEC Circulars. The appellant contended that the value of goods supplied, shown separately with VAT paid, should not be included in the taxable service value. The appellant cited a Tribunal decision supporting their position. The adjudicating authority had imposed penalties and demanded differential service tax, disregarding the Circulars. The appellant sought relief based on the Circulars and past decisions.

2. The appellant's advocate argued that the nature of the work done was vehicle service, relying on various legal precedents. The advocate contended that even if VAT was paid incorrectly, service tax liability remained. The advocate emphasized that the material supplied should be considered part of the service provided. The respondent opposed, citing cases where the nature of the contract determined tax liabilities. The respondent argued that since the appellant sold vehicle parts and provided repair services, the material value should be included in taxable service. The Tribunal analyzed the invoices provided by the appellant, noting separate listings for parts and services with VAT and service tax paid accordingly.

3. The Tribunal determined that the cases cited by the respondent were not directly applicable to the appellant's situation. It highlighted that the appellant's invoices clearly separated parts and service charges, complying with CBEC Circulars. The Tribunal concluded that when VAT was paid on supplied materials, service tax was not required. Additionally, the Tribunal referenced a previous decision where repairs for vehicles of another manufacturer were not taxable. Consequently, the Tribunal set aside the impugned order, ruling in favor of the appellant. The appeal was allowed with possible consequential relief.

This detailed analysis of the judgment addresses the issues of service tax demand and the inclusion of goods value in taxable service, providing a comprehensive understanding of the legal reasoning and outcomes.