2016 (12) TMI 35 - AT - Service Tax

Demand - valuation - photographic service - the value of the material used by him, while providing the said services, are required to be added in the assessable value of the services - Held that - the issue on merits stand decided against the appellant by Larger Bench decision of the Tribunal in the case of Aggarwal Colour Advance Photo System Vs. CCE 2011 (8) TMI 291 - CESTAT, NEW DELHI (LB) , where it was held that The value of other goods and material, if sold separately would be excluded under exemption Notification No. 12/2003 and the term sold appearing thereunder has to be interpreted using the definition of sale in the Central Excise Act, 1944 and not as per the meaning of deemed sale under Article 366(29A)(b) of the Constitution. Period of limitation - Held that - reliance placed on the decision of the case of CCE Vs. Centre Point Colour Lab 2011 (9) TMI 269 - CESTAT, NEW DELHI , where it was held that longer period of limitation would not be available to the Revenue. Demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Demand confirmed against appellant for photographic services; inclusion of material cost in assessable value; challenge on limitation grounds.

Analysis:
The judgment by the Appellate Tribunal CESTAT New Delhi dealt with a case where a demand of ?2,24,074 was confirmed against the appellant, a provider of photographic services, for the period 2003-2005. The demand was based on the inclusion of the value of material used by the appellant in the assessable value of the services provided. The appellant, through their advocate, contested the demand primarily on the grounds of limitation, acknowledging that the issue on merits had been decided against them by a Larger Bench decision of the Tribunal in a previous case. The advocate cited a precedent decision of the Tribunal to argue that a longer period of limitation should not be available to the revenue in such cases.

The Tribunal considered the issue of limitation in detail, referring to a previous decision involving similar circumstances. It was noted that the demand in the present case was beyond the normal period of limitation. Citing the precedent decision, the Tribunal held that the demand beyond the period of limitation was time-barred. Consequently, the Tribunal set aside the demand and allowed the appeal with consequential relief to the appellant. The Tribunal emphasized that on remand for requantifying the duty demand falling within the period of limitation, the claim of the appellant regarding the credit of duty/tax paid on raw materials should be considered and allowed if found eligible.

The judgment highlighted the importance of bona fide belief in cases involving the inclusion of material cost in the value of services. It referenced earlier decisions and legal principles to support the conclusion that in situations where there was a genuine doubt about the proper valuation, invoking an extended period of limitation may not be justified. Both the appellant's advocate and the Departmental Representative agreed that the issue of limitation had been addressed in previous decisions by the Tribunal, leading to the Tribunal's decision to set aside the demand in the present case due to being beyond the normal limitation period.