2015 (7) TMI 673 - AT - Service Tax

Benefit of Notification No. 12/2003-S.T., dated 20-6-2003 - Valuation - Exemption for the goods which are sold during the course of providing service - Held that - scrutiny of the sales invoices for the period 2006-07 revealed that appellants had recovered cost of certain materials used during the course of provision of service. If this is not sale of goods, we do not understand what exactly is. If the cost of material is shown separately in the invoice and the amount is worked out on that basis, appellant s claim for benefit of Notification in our opinion is already proved. The learned counsel also submitted that the claim is only in respect of what is known as photo prints. Appellants are engaged in providing service of sale of space for advertisement and after the advertisement is published, they submit a copy of the relevant materials and the advertisement copy and they also buy the magazines and provide it to the customers at actual cost. This is not actually a service but it is actually recovery of cost of materials from the customers. In our opinion, the documents produced by the appellant is sufficient to find out their eligibility. Since the entire issue is based on a few invoices and that the amount involved is only ₹ 51,000 - Decided in favour of assessee.

Summary

Issues involved: Confirmation of Service Tax demand on cost of materials and out of pocket expenses recovered by appellants, eligibility for benefit of Notification No. 12/2003-S.T.

Confirmation of Service Tax Demand: The Tribunal confirmed a demand for Service Tax of Rs. 51,427 on the ground that the appellants were liable to pay Service Tax on the cost of materials and out of pocket expenses recovered from clients, as they were deemed ineligible for the benefit of Notification No. 12/2003-S.T., providing exemption for goods sold during service provision.

Eligibility for Notification Benefit: The appellant contended that they had produced sample invoices demonstrating eligibility for the Notification benefit, but the Commissioner held otherwise. The Tribunal noted that the sales invoices revealed the recovery of material costs during service provision, indicating a sale of goods. The separate display of material costs in the invoices supported the appellant's claim for Notification benefit, particularly for photo prints. The Tribunal found the documents produced by the appellant sufficient to establish eligibility, given the nature of recovering material costs from customers after providing advertisement space services.

Decision and Relief: Considering the limited scope of the issue and the nominal amount involved, the Tribunal decided to allow the appeal at this stage. The Tribunal granted consequential relief, if any, to the appellants, emphasizing the adequacy of the documents presented to ascertain their eligibility for the Notification benefit. The operative portion of the order was pronounced in open court, concluding the matter in favor of the appellants.

This summary provides a detailed analysis of the legal judgment, covering the issues involved and the Tribunal's reasoning leading to the decision in favor of the appellants.