2016 (11) TMI 789 - AT - Service Tax

Valuation - photographic service - the value of the material used, while providing the said services, required to be added in the assessable value of the services - period of limitation - Held that - the demand is admittedly beyond the normal period of limitation except a part, in one case, by following the decision of the case CCE Vs. Centre Point Colour Lab 2011 (9) TMI 269 - CESTAT, NEW DELHI where it was held that the value of services in relation to photography would be the gross amount charged including the cost of goods and material used and consumed in the course of such services - we set aside the impugned orders and remand the matter to the original adjudicating authority for requantification of the demand, if any falling within the limitation period. The issue was not free from doubt and there is no malafide on the part of the appellant, imposition of any penalty upon them is not justified. Appeal disposed off - decided in favor of appellant.

Summary

Issues:
1. Confirmation of demand against the appellants for the value of material used in providing photographic services.
2. Assailing the demand on the point of limitation.

Analysis:
The judgment by the Appellate Tribunal CESTAT New Delhi involved the confirmation of demands against the appellants, who provided photographic services, for the value of material used in the services. The demand, amounting to ?2,31,773/- in one case and ?47,600/- in another, was raised through Show Cause Notices dated 26.09.2006 and 20.11.2006 for different periods. The appellants, through their Advocate, acknowledged that the issue on merits had been decided against them by a Larger Bench decision but contested the demand on the grounds of limitation.

The Advocate for the appellants cited a precedent decision of the Tribunal where it was held that a longer period of limitation would not be available to the Revenue in similar circumstances. Referring to the Tribunal's decision in a specific case, it was noted that the demand raised beyond the limitation period could not be sustained due to a bona fide doubt regarding the inclusion of material cost in the value of services. The Tribunal emphasized that the earlier decisions favored the assessee, indicating a genuine doubt about the inclusion of material costs. Therefore, the Tribunal concluded that the demand beyond the limitation period was time-barred, and no penalty should be imposed.

The Tribunal also highlighted another case where notices issued beyond the limitation period were not valid due to the assessee's bona fide belief regarding the value of raw material used in services. Consequently, the Tribunal remanded the matter for requantification of the demand falling within the limitation period and emphasized that no penalty was warranted due to the genuine doubt and belief held by the appellants. The judgment set aside the impugned orders and directed the original adjudicating authority to reassess the demand within the limitation period while considering the appellants' claim for credit of duty/tax paid on raw materials.

In conclusion, the Tribunal ruled in favor of the appellants, holding that the demands beyond the limitation period were time-barred, and penalties were not justified due to the absence of malafide intentions. The penalties were set aside, and the appeals were disposed of accordingly.