2019 (2) TMI 440 - AT - Service Tax

Valuation - repair and maintenance service of computers - inclusion of value of material (spare parts) used in provision of service in the assessable value - benefit of N/N. 12/2003-ST dated 20.6.2003 - Held that - The learned Commissioner even though held that in principle the appellants are eligible to the benefit of Notification, but rejected the same observing that they could not adduce evidence in this regard. Now, the appellant claims that they are in possession of necessary bills and invoices to establish that spare parts were sold to the customers and suffered VAT/ Sales Tax. In the interest of justice, therefore, the matter is remanded to the adjudicating authority so as to provide an opportunity to the appellant to adduce evidence in this regard - appeal allowed by way of remand.

Summary

Issues:
- Appeal against Order-in-Original No. 13/ST/2014/C dated 30.6.2014
- Inclusion of value of spare parts in taxable service charges
- Eligibility for exemption under Notification No. 12/2003-ST dated 20.6.2003
- Possession of bills/invoices to establish sale of spare parts to customers

Analysis:

Issue 1: Appeal against Order-in-Original
The appeal was filed against Order-in-Original No. 13/ST/2014/C dated 30.6.2014 passed by the Commissioner of Central Excise & Service Tax, Nagpur. The appellant, engaged in providing taxable service under Maintenance or Repair Service of Computers, disputed the demand for Service Tax amounting to ?4,56,72,296/- with interest and penalty, which was confirmed after adjudication.

Issue 2: Inclusion of Spare Parts in Taxable Service Charges
The appellant contended that the spare parts used during maintenance and repair services of HP and EPSON brand computers were supplied free by the manufacturers and Service Tax was discharged on the full value. They argued that the value of such parts should not be included in the service charges. The Commissioner acknowledged the eligibility to deduct the value of spare parts but questioned the lack of evidence regarding VAT/Sales Tax payment on excluded goods. The appellant asserted possession of bills/invoices to prove that spare parts were sold to customers separately.

Issue 3: Eligibility for Exemption under Notification No. 12/2003-ST
The appellant sought exemption under Notification No. 12/2003-ST dated 20.6.2003 for the spare parts sold separately to customers during repair and maintenance services. The Tribunal noted that while the Commissioner recognized the eligibility for the exemption, evidence supporting VAT/Sales Tax payment was required. The matter was remanded to the adjudicating authority to allow the appellant to provide necessary evidence for availing the benefit of the notification.

Issue 4: Possession of Bills/Invoices
The appellant claimed to possess bills and invoices demonstrating the sale of spare parts to customers during the provision of repair and maintenance services. The Tribunal, considering the interest of justice, decided to remand the case to the adjudicating authority to enable the appellant to present the required evidence. All issues were kept open for further consideration.

In conclusion, the appeal was allowed by way of remand, providing the appellant with an opportunity to substantiate their claim regarding the sale of spare parts and their eligibility for exemption under Notification No. 12/2003-ST.