2018 (7) TMI 1003 - AT - Service Tax

Reduction of cost of materiel from the value of services - Benefit of N/N. 12/2003 ST date 20.06.2003 - maintenance and repair service - It was alleged that benefit of Notification was subject to documentary proof indicating the value of said goods and material sold, which the appellant failed to provide - Rule 6 of CCR 2004 - Whether the respondents are required to indicate the cost of goods and material supplied in the course of rendering a service specifically in the invoices? Held that - The N/N. 12/2003 ST dated 20.06.2003, inter alia, exempts so much of the value of all taxable services, as is equal to the value of the goods and materials sold by the service provider to the recipient of service; hence, the service tax is leviable thereon under Section 66 of the said Act, subject to the condition that there is documentary proof specifically indicating the value of the said goods and materials - The only requirement in terms of the Notification is to provide documentary evidence proof indicating the value of said goods and materials. There is no requirement to indicate value separately in each invoice, this Bench would not be in a position to decide on the issue of whether or not any documentary evidence is in existence to show the value of goods and articles supplied by the respondents in course of rendering service to their clients - It is a matter of fact and therefore, the case requires to go back to the original authority to verify the documentary evidence to be produced by respondents to arrive at the value of goods and articles used by them. Appeal allowed by way of remand.

Summary

Issues Involved:
1. Alleged non-maintenance of documentary proof for availing exemption under Notification No. 12/2003 ST.
2. Alleged contravention of Rule 6 of CENVAT Credit Rules, 2004 regarding excess CENVAT credit.
3. Appeal by Revenue challenging the Commissioner (Appeal)'s decision on abatement and documentary proof requirements.

Analysis:
1. The respondents, engaged in maintenance and repair services, claimed exemption under Notification No. 12/2003 ST by availing 75% abatement on service value. However, during a specific period, they did not provide documentary proof of the value of goods and materials sold to recipients, as required by the Notification. The Revenue issued a show cause notice for Service Tax, Education Cess, and CENVAT credit amounting to specific figures.

2. The Commissioner (Appeal) set aside the Additional Commissioner's order, reasoning that Rule 6 applies when both taxable and exempted services are provided. In this case, the respondents only claimed exemption for materials used in a particular service, not for all services. The Commissioner also noted that the respondents maintained a 75:25 cost ratio for materials and services, supported by a Chartered Accountant certificate.

3. The Revenue appealed, arguing that the abatement should be based on actual documented values, not a notional ratio, and that the CA certificate did not verify individual bills. The Tribunal analyzed the Notification, emphasizing the need for documentary proof of goods and materials value. The Tribunal referred to a past case (Adlabs) where maintaining records sufficed for deduction. However, the CA certificate in this case lacked verification of actual values, leading to a remand for proper verification by the original authority.

4. The Tribunal clarified that while no separate value indication in each invoice was required, documentary evidence of goods and materials value was crucial. The appeal was allowed for remand to verify the documentary evidence provided by the respondents for determining the correct service tax liability.

This detailed analysis covers the issues of exemption availing, CENVAT credit contravention, and the appeal challenging the abatement and documentary proof requirements, providing a comprehensive understanding of the judgment.