2018 (10) TMI 164 - AT - Service Tax

Valuation - includibility - Maintenance and Repair service to motor vehicles - whether the value of the spare parts procured by the appellant from M/s KTL is required to be added in the value of the services provided by the appellant? - Extended period of limitation. Held that - Apart from the fact that M/s KTL is a separate private limited Company engaged in the sale and purchase of spare parts and hence having no relation to the maintenance and repair services provided by the appellant, the issue is otherwise also decided in favor of the appellant by the precedent decisions. Tribunal in the case of M/s Ketan Motors Ltd. Vs Commissioner of Customs, Central Excise &Service Tax, Nagpur 2014 (3) TMI 226 - CESTAT MUMBAI has held that the value of the spare parts used in providing Maintenance and Repair services by a authorized substation is not includible in the value of the services even in a composite transaction. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the value of spare parts procured by the appellant from a separate company should be added to the value of services provided.
2. Validity of demand for service tax and penalties imposed by the revenue department.
3. Interpretation of precedent decisions in similar cases.

Analysis:
1. The appellant, registered as an Authorized Service Station with the Service Tax Department, faced a demand for service tax and penalties due to the revenue department's view that the value of spare parts procured from a separate company should be included in the services provided. The Commissioner confirmed a significant tax demand and penalties under various sections of the Finance Act. The issue revolved around whether the spare parts' value should be added to the services provided by the appellant.

2. The Tribunal analyzed the relationship between the appellant and the separate company supplying spare parts. It was noted that the supplier was a private limited company engaged in spare parts sales, unrelated to the maintenance and repair services provided by the appellant. Referring to a precedent decision in the case of M/s Ketan Motors Ltd. Vs Commissioner of Customs, Central Excise & Service Tax, the Tribunal held that the spare parts' value used in maintenance and repair services by an authorized service station should not be included in the service value, even in a composite transaction. The appellant's representative clarified that the spare parts were sold by the supplier company with VAT payment, further supporting the appellant's position.

3. Considering the lack of relationship between the spare parts supplier and the services provided by the appellant, along with the precedent decision supporting the appellant's stance, the Tribunal set aside the impugned order. The appeal was allowed, providing the appellant with consequential relief. The judgment emphasized the importance of precedent decisions and the necessity to analyze the specific circumstances of each case to determine tax liabilities accurately.