2018 (9) TMI 389 - AT - Service Tax

Valuation - Exclusion of value of material - value of goods/ material sold while providing the said taxable services has not been shown separately on the invoices. - Benefit of N/N. 12/2003-ST - Management, Maintenance or Repair Service Held that - The respondents substantially comply with requirements of the N/N. 12/2003-ST and benefit of the said Notification cannot be denied while computing the value for payment of Service Tax on the taxable services provided by them. Though Commissioner (Appeal) has in his order observed that value of materials deemed to be sold during the execution of the contract can be calculated to be 67% of the gross value on which VAT has been paid . The correctness of same needs to be verified from the documents and actual value of material sold during the provisioning of such services needs to be worked and demand of service tax worked out accordingly - thus, it is apparent that demand of Service Tax payable needs to be worked out and the payments already made against the provisions of these services be adjusted the against the demand so worked out. If any amount remains unpaid after such adjustment the same needs to be recovered from the respondents. Appeal dismissed - decided against Revenue.

Summary

Issues:
- Classification of services under "Management, Maintenance or Repair Service"
- Applicability of benefit under Notification No 12/2003-ST
- Admissibility of abatement under Notification No 1/2006
- Compliance with conditions specified in Notification No 12/2003-ST
- Calculation of service tax payable and adjustment of payments

Classification of Services:
The respondents provided taxable services categorized as "Management, Maintenance or Repair Service." The Additional Commissioner confirmed a demand of ?40,39,101/- along with penalties for incorrect classification. On appeal, the Commissioner classified the services under the same category and ordered the appropriation of service tax already paid against the tax payable, setting aside the demand confirmed by the lower authority.

Applicability of Notification No 12/2003-ST:
The main issue revolved around whether the benefit under Notification No 12/2003-ST would be admissible to the appellant for determining the tax payable under the category of "Management, Maintenance or Repair Service." The CESTAT analyzed various documents, including work orders, VAT returns, and ledger accounts, to conclude that the respondents complied with the notification's requirements. The Commissioner ordered the calculation of service tax payable after allowing the benefit of the notification and adjusting payments already made.

Admissibility of Abatement and Compliance:
The department contended that the services provided did not qualify for the works contract composition scheme or abatement under Notification No 1/2006. They cited specific decisions to support their argument. However, the CESTAT referred to past judgments, including Wipro GE Medical Systems Pvt Ltd case, to emphasize that service tax cannot be levied on the portion where sales tax has been charged. The tribunal upheld the order of the Commissioner, emphasizing the importance of considering the value of materials sold during the provision of services.

Calculation of Service Tax Payable:
The Commissioner's order highlighted the need to calculate the service tax payable and adjust payments already made against the demand. The tribunal dismissed the revenue's appeal, emphasizing the importance of working out demands in line with the observations made in the order. The cross objection was also disposed of accordingly.

This detailed judgment addressed the issues of service classification, notification applicability, abatement, compliance, and service tax calculation, providing a comprehensive analysis of the legal aspects involved in the case.