2019 (9) TMI 1493 - AT - Service Tax

Levy of Service Tax - reimbursable amount of spares received from the manufacturers - case of Revenue is that the appellant had been reimbursed with the cost of replacement of spares while servicing of vehicle during the warranty period, but did not discharge service tax on the value of such reimbursement amount received from the recipient of service - HELD THAT - The adjudicating authority had recorded that no documentary evidences were submitted by the appellant to show that it had maintained the records to demonstrate that the quantity of spares and consumable were used in providing such services. On a close reading of the adjudication order, we find that there is contradiction in the stand taken by the original authority. Thus, considering the submissions of the appellant that it had maintained adequate records and also paid VAT/CST, we are of the view that the matter should be remanded to the original authority for proper fact finding and verifying of the documents to arrive at the conclusion, whether the adjudged demand in question can be confirmed under the circumstances of the case. It is expected that the original authority should closely examine the contents of the master Circular dated 23-8-2007, Notification No. 12/2003, dated 20-6-2003 for a proper conclusion on the issue regarding leviability of service tax on the appellant - Appeal allowed by way of remand.

Summary

Issues:
- Liability to pay service tax on reimbursement amount for replacement of spares during warranty period
- Compliance with master Circular No. 97/7/2007-S.T.
- Adequacy of documentary evidence for VAT/CST payment on spares and consumables
- Contradiction in original authority's stand
- Remand for fresh fact-finding and verification

Analysis:
The appeal addressed the issue of liability to pay service tax on the reimbursement amount received for the replacement of spares during the warranty period by the appellant, a provider of taxable services. The Revenue contended that the appellant did not discharge service tax on the reimbursed amount, leading to show cause proceedings and confirmed demands by the original authority and the Learned Commissioner (Appeals). The appellant argued that a previous Tribunal order in their favor rendered the issue non-res integra, thus challenging the confirmation of demands in the impugned order.

Regarding compliance with the master Circular No. 97/7/2007-S.T., the Revenue emphasized the lack of documentary evidence proving VAT payment on spare parts sold by the appellant. The original authority noted contradictory submissions, where the appellant claimed to have submitted invoices showing VAT/CST payment on spares, while also acknowledging the absence of documentary evidence demonstrating the usage of spares and consumables in providing services. The Tribunal observed this contradiction and decided to remand the matter to the original authority for a more thorough fact-finding process.

The Tribunal highlighted the importance of closely examining the contents of the master Circular dated 23-8-2007, Notification No. 12/2003, and the Tribunal's previous order to reach a proper conclusion on the leviability of service tax on the appellant. Given the contradictions and lack of clarity in the original authority's findings, the Tribunal set aside the impugned order and remanded the case for fresh fact-finding, emphasizing the necessity of granting the appellant an opportunity for a hearing before a new decision is made.

In conclusion, the appeal was allowed by way of remand, with the matter sent back to the original authority for a comprehensive reevaluation in line with the Tribunal's observations. The judgment focused on ensuring proper verification of facts and documents to address the issues of liability for service tax on reimbursed amounts and compliance with relevant circulars and notifications.