2017 (12) TMI 1173 - AT - Service Tax

Abatement - maintenance and repair service - Case of Revenue is that as no sale of materials have taken place, the respondents are not eligible for abatement as per N/N. 12/2003-ST dated 20.6.2003 - Held that - It is not disputed that the respondents have discharged the sales tax on the works contract under section 7C of TNGST Act, 1959. So also they have informed the department vide letter dated 19.3.2005 addressed to the Assistant Commissioner of Service Tax, Chennai that they have proper inventory system to arrive the value of material sold to each customer - respondents having discharged the sales tax on 70% of the contracted value, they are eligible for abatement as per the notification - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Eligibility for abatement under Notification No. 12/2003-ST for maintenance and repair services.

Detailed Analysis:
The case involved the respondents, engaged in maintenance and repair services, claiming a flat rate of 70% of the total contracted value as abatement towards the cost of parts and materials used. The department issued a show cause notice alleging ineligibility for abatement due to the absence of actual sale of materials as per Notification No. 12/2003-ST. The original authority confirmed the demand, but the Commissioner (Appeals) set it aside, leading to the current appeal.

The appellant reiterated the grounds of appeal, while the respondent's counsel argued that the respondents had paid VAT/sales tax on 70% of the total contracted value, making them eligible for abatement as per the Notification. The Tribunal considered both sides' submissions and examined the key issue raised by the department regarding the absence of actual sales. However, it was noted that the respondents had indeed discharged sales tax under the TNGST Act and maintained proper inventory systems to determine the value of materials supplied to each customer.

Given that the respondents had paid sales tax on 70% of the contracted value and maintained detailed records of parts and consumables supplied to customers, the Tribunal found no grounds to interfere with the Commissioner (Appeals)'s decision. Consequently, the Tribunal upheld that the respondents were eligible for abatement as per the Notification. Therefore, the appeal was dismissed, affirming the respondents' eligibility for abatement under the relevant Notification.